Transportation in Canada 2011 Comprehensive Review © Minister of Public Works and Government Services, Canada, 2012 Cat

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Transportation in Canada 2011 Comprehensive Review © Minister of Public Works and Government Services, Canada, 2012 Cat. No. T1-23A/2011E-PDF ISSN 1482-1311 Également disponible en français sous le titre « Les transports au Canada 2011 » table of contents

1. Letter from Minister...... V 2. Executive Summary...... 1 3. Introduction...... 5 4. Transportation and the Economy...... 7 4.1 Canada’s Economic Performance...... 7 4.2 International Trade...... 9 4.3 Demographics...... 11 4.4 Financial performance of major transportation stakeholders...... 11 4.5 Productivity of the transportation sector...... 12 4.6 Energy Prices and Usage...... 12 5.1 Introduction...... 15 5. Government Expenditures and Revenues from Transportation...... 15 5.2 Air Expenditures...... 16 5.3 Marine Expenditures...... 18 5.4 Rail Expenditures...... 20 5.5 Road Expenditures...... 22 5.6 Multimodal Expenditures...... 26 5.7 Government Revenues from Transportation...... 27 6. Air Transportation...... 31 6.1 Overview of Air Transportation ...... 31 6.2 2011 Year in Review...... 32 6.3 2007–11 Recap...... 34 6.4 Economic Framework and Infrastructure...... 36 6.5 Environment...... 41 6.6 Safety...... 46 6.7 Security...... 51 7. Marine Transportation...... 55 7.1 Overview of Marine Transportation...... 55 7.2 2011 Year in Review...... 56 7.3 2007–11 Recap...... 58 7.4 Economic Framework and Infrastructure...... 61 7.5 Environment...... 67 7.6 Safety...... 70 7.7 Security...... 73

2011Transportation in Canada III table of contents

8. Rail Transportation...... 77 8.1 Overview of Rail Transportation...... 77 8.2 2011 Year in Review...... 78 8.3 2007–11 Recap...... 80 8.4 Economic Framework and Infrastructure...... 82 8.5 Environment...... 86 8.6 Safety...... 88 8.7 Security...... 90 9. Road Transportation...... 91 9.1 Overview of Road Transportation...... 91 9.2 2011 Year in Review...... 91 9.3 2007–11 Recap...... 93 9.4 Economic Framework and infrastructure...... 96 9.5 Environment...... 107 9.6 Safety...... 110 9.7 Security...... 113 10. Transportation of Dangerous Goods...... 115 10.1 Overview of Transportation of Dangerous Goods...... 115 10.2 2011 Year in Review ...... 115 10.3 2007–11 Recap...... 116 10.4 TDG Issues...... 116 11. Gateways and Corridors...... 119 11.1 The Emergence of Strategic Gateways and Trade Corridors...... 119 11.2 Supply Chain Performance Monitoring...... 122 11.3 Transportation, Logistics and Global Value Chains: a Canadian Perspective...... 124 12. Outlook, Trends and Future Issues...... 131 12.1 Introduction...... 131 12.2 Global pressures ...... 131 12.3 Domestic pressures...... 136 12.4 Technology and research in the pursuit of an efficient, clean, safe and secure transportation system....142 12.5 Conclusions...... 147 13. Conclusions...... 149

IV Transportation2011 in Canada

Executive Summary 2

Canada’s transportation system overcomes the limits of the country’s topography and geography—linking communities, reducing the impact of distance, and moving people and goods across the country and around the world.

Introduction average retail price of diesel, a 28.2% rise in price of rail diesel, a 32.1% jump in price for jet fuel, and a 32.6% The 2007 Canada Transportation Act requires the climb in price for marine bunker fuel. Minister of Transport to table in Parliament this compre- In addition to grappling with higher fuel costs, hensive report on the state of the transportation sector Canada’s transportation industry must also adapt to every five years. changing demographics caused by Canada’s ageing The bulk of this report focuses on 2011 while offering population. This key structural issue cuts across all historical retrospective. It also examines transportation regions and sectors of the economy, and the transporta- from various perspectives: its impact on the economy; tion sector is not immune. Changing demographics will key factors affecting the four modes of transportation force transportation patterns to shift, and will include (air, marine, rail and road); the movement of dangerous heightened demand for accessible transportation. goods; Canada’s gateways and trade corridors; and trends and future issues. Government expenditures and revenues from transportation Transportation and the economy All three levels of government provide funds and Demand for freight and passenger transport is driven collect revenues from the transportation sector. by overall economic conditions. Canada’s economic growth slowed in the second half of 2011, due to lower Government funding for transportation takes on a domestic demand resulting from decelerated con- number of different forms (see Addendum Tables G1 sumer spending. Nevertheless, Canada’s economic to G3). At the federal level, it includes funding for VIA performance was a success compared to that of other Rail Canada, Marine Atlantic and Infrastructure Canada industrialized economies; Canada’s GDP growth in programs. At the provincial and municipal levels, 2011 ranked third amongst G-8 countries, after Russia transportation funding covers the cost of building and and Germany. Gross domestic product rose by 2.5% in maintaining roads, ferries and public transit to name but 2011, down from 3.2% in 2010. This compares favour- a few areas. Governments also collect revenues from ably to the 2.8% decline reported in 2009, at the height transportation. At the federal level, revenue sources of the economic downturn. include fuel excise and sales taxes, airport ground leases and the Air Traveller Security Charge. At the Canada’s economic performance was buoyed in part provincial level, revenues from transportation come by higher commodity prices—a double-edged sword mainly from fuel taxation and licensing. Table G4 provides for the transportation sector, as higher prices stimulate more details on public revenues from transportation. demand but also drive up costs. The sector’s profitability is largely dependent on affordable fossil fuels, since energy is often the largest or second largest expense— Air transportation after labour—for a transportation company, regardless of mode. Fluctuations in energy prices were noted Canada’s air transport system encompasses 1,889 over the 2006–2011 period, with significant increases aerodromes; 2,220 air carriers; a private not-for-profit in 2011, including a 23.5% increase in the Canadian corporation owning and operating Canada’s civil air

2011Transportation in Canada 1 2 Executive Summary navigation system (NAV CANADA); and the Canadian Crown corporations. In 2011, they handled a combined Air Transport Security Authority (CATSA), a Canadian 50,743 assignments, generating $180 million of revenue Crown corporation responsible for security screening at for an overall net income of $10.8 million. designated Canadian airports. Some of the 26 largest airports in the country form the National Airport System Alleviating water pollution remains an important focus (NAS). These airports handle approximately 90% of all of government and the marine industry. In 2011, Canada passenger traffic in Canada and have experienced a signed the Hazardous and Noxious Substances (HNS) period of acute expansion and construction aimed at Protocol adopted in 2010 by a Diplomatic Conference increasing capacity. convened by the International Maritime Organization (IMO). The Protocol covers approximately 6,500 sub- In 2011, air transportation carried 78.4 million passengers stances and will bring into force an international regime (up 2.5% from 2010), and 739,000 tonnes of freight of liability and compensation for HNS. Transport Canada (down 9.1% from 2010) (see Addendum Tables A18 to continued to develop regulations and measures to pre- A19C). Air cargo tends to be higher-valued or perish- vent pollution from vessels operating in Canadian waters able goods. The air industry transported $110 billion of and the introduction of invasive species into Canada’s Canada’s international trade, up nearly 10% from 2010. waterways, and to enable the implementation of a North American Emission Control Area. Canada’s aviation industry’s fuel efficiency has improved by 1.9% annually since 1990, surpassing the On the security front, the Perimeter Security Action agreed-upon goal in the voluntary agreement between Plan announced in December 2011 proposed several carriers and the government. measures aimed at improving, better aligning and coordinating maritime security regulatory measures between Canada has one of the safest air transportation Canada and the U.S. while enhancing marine security systems in the world. During the last decade, the rate of and fostering economic opportunities. air transportation accidents has continuously declined, from nearly eight accidents per 100,000 hours flown in 2000 to fewer than six in 2011. The implementation of Rail transportation Safety Management Systems (SMS) is well underway within the air transportation industry, with SMS policies, During 2011, the rail transport industry moved processes, procedures and systems covering more 313.5 million tonnes of freight (see Tables RA7 and than 90% of revenue passenger-kilometres in 2011. RA10). In 2010, the latest year for which data is avail- Improvements to systems for screening passengers and able, the rail industry carried 4.2 million passengers on their belongings have been introduced, including new VIA Rail, 146,500 passengers on other intercity railways equipment and lane configurations that improve the and 64.3 million on commuter railways in the Montreal, flow of passengers and bags through security screening Toronto and Vancouver metropolitan areas (see Tables checkpoints at major Canadian airports. RA30 and RA31). The recent economic crisis coupled with cyclical fluctuations in the Canadian economy impacted volumes of rail freight as well as passenger Marine transportation activities, with the railway industry employing 32,006 people in 2010, up 1% from the previous year, and In 2011, marine transportation handled more than $205 employee average annual compensation at $76,564, up billion of Canada’s international trade. It is by far the 2.8% in a year (see Table RA5). most important mode, both in terms of value and volume, for serving overseas markets. In 2010, marine Between 2006 and 2011, the federal government freight traffic totalled 392 million tonnes—269 of which amended the Canada Transportation Act to strengthen were handled at the 17 Canada Port Authorities (CPAs). shipper protection provisions, and the Railways Safety Bulk commodities were the main products transported Act (RSA) to enhance rail safety oversight and enforce- by ship. ment, and to increase the focus on safety management systems and environmental protection. The government CPAs, which administer federally owned ports at also followed up with a Rail Freight Service Review, arm’s-length and on a commercial basis, are financially releasing the final report in December 2010 and govern- self-sufficient. In 2010, they reported combined revenues ment responses on March 18, 2011. of $456.5 million, 18% more than in 2009, with total net income of $101.7 million (see Tables M8 and M9). Canadian National (CN) and Canadian Pacific Railway (CPR) have pursued billion-dollar capital investment pro- Pilotage services, which provide vessels with local grams aimed at improving overall efficiency, reliability and navigational expertise, are grouped around four federal

2 Transportation2011 in Canada Executive Summary 2

fluidity of the rail network through targeted investment Meanwhile, public transit continued to gain popularity in track and roadway, buildings, rolling stock and infor- across the country, as did active transportation and mation systems. Locomotive fleet improvement also shared transportation systems. Major new mass-transit took priority, as both companies aimed to improve infrastructure projects are being planned in Montreal, fuel efficiency. Both Class I railways have focused Ottawa, Toronto, Edmonton and Vancouver. investment in fleet renewal programs, technology and the adoption of best practices to achieve economic Of all transportation modes, the road mode is by and environmental sustainability of their operations. far the largest producer of greenhouse gases (GHG), In passenger rail, VIA Rail completed infrastructure accounting for 82.5% of domestic GHG emissions from upgrades of $300 million in its Montreal-Ottawa-Toronto transportation, and 19% of total Canadian emissions in corridor, and opened a new $750,000 station in Smiths 2009. However, more stringent regulations introduced Falls, Ontario. in 2011 for vehicle model years 2012 to 2016, as well as technological advances and alternative fuel and 2011 saw significant progress in efforts to reduce air energy types, will help contain the road mode’s carbon emissions from rail transportation. Both CN and CPR footprint. As well, the Government of Canada has intro- announced plans to improve their locomotive fleet fuel duced a number of initiatives in recent years to develop efficiencies and lower emissions by purchasing new lower carbon-intensive alternative and renewable fuels. locomotives and rebuilding some of their existing fleet, while Transport Canada completed six preliminary con- The most recent road casualty data shows a decrease sultation sessions on the development of locomotive air in road casualty collisions from 148,154 in 2005 to pollutant emission regulations. 123,524 in 2009 (see Table S6), a decrease in the number of fatalities from 2,898 in 2005 to 2,207 in 2009, and In keeping with the Rail Safety Strategic Plan 2010–2015, a decrease in the number of injuries from 204,768 to Transport Canada launched the first phase of its national 170,415 (for 2005 and 2009, respectively). Numerous data collection system in 2011 and made significant outreach and public initiatives have targeted impaired progress on its implementation of risk-based planning driving—which may be a factor in up to 37.6% of fatal and quality management procedures. accidents—winter driving and driver distraction. Canada also supported the United Nations in declaring 2011 to 2020 the Decade of Road Safety. Road transportation

With more than one billion (two-lane equivalent) Transportation of dangerous goods kilometres of roads (see Table RO2), road transportation is Canada’s most important mode for passenger and The safety record for the transportation of dangerous freight transportation. The National Highway System’s goods has improved over the past five years: some 358 (NHS) 38,000 kilometres of roads are critical to domes- transportation accidents involving dangerous goods tic and North American trade and tourism activities. were reported in 2011, 4.4% below the average for the While the road network falls under the responsibility 2006–2010 period; 70% of them occurred during han- of provinces, territories and municipalities, the federal dling at transportation facilities, and 30% took place government contributed financially to a number of major while the goods were in transit. The 96 road-related road-related projects through several programs—such dangerous goods accidents accounted for more than as the Building Canada Fund. The federal govern- 92% of in-transit dangerous goods accidents (see ment continues to contribute to a significant number Tables S22 to S24). Fatalities resulting from the trans- of projects, including the construction of a new bridge portation of dangerous goods has remained at zero for to replace the existing Champlain Bridge in Montreal, the fifth consecutive year. the construction of a new bridge over the St. Lawrence Seaway to connect both ends of Highway 30, and work ateways and trade corridors on the Detroit River International Crossing between G Windsor and Detroit, which began in 2011. Canada is working to ensure ongoing trade In terms of freight on Canada’s roads, in 2010, competitiveness through the implementation of strate- Canadian for-hire trucking carriers moved 225 billion gic planning and focused investments in the country’s tonne-kilometres of freight (see Table RO17), 139 billion transportation system through three initiatives: the in domestic freight and 87 billion in international freight Asia-Pacific Gateway and Corridor Initiative (APGCI), traffic (see Tables RO13 to RO15). On the passenger the Ontario-Quebec Continental Gateway, and the side, bus industry revenues in 2010 were $14.3 billion. Atlantic Gateway and Trade Corridor. To support these

2011Transportation in Canada 3 2 Executive Summary initiatives, the federal government created the $2.1-bil- northern regions where transportation challenges lion Gateways and Border Crossings Fund and the require a tailored approach. However, this will present $1.0-billion Asia-Pacific Gateway and Corridor Fund significant challenges in building a sustainable transpor- within Building Canada, the federal government’s over- tation network that can resupply the North and export all plan for infrastructure that commits almost $6 billion its resources while taking into account the needs of the to Canada’s gateways and trade corridors to support local population and adaptation to climate change. key projects. Canada’s transportation sector faces a pending two- Gateway development reaches beyond infrastructure. pronged infrastructure challenge: first, how to optimize A broad analytical framework, including a fluidity indica- use of current infrastructure to alleviate congestion and tor, has also been developed to evaluate how gateways adapt to ever-growing traffic volumes; and second, how and strategic trade corridors interact operationally, to address the issue of ageing infrastructure within the to examine end-to-end supply chain performance by current fiscal framework. An additional consideration focusing on the time component, and to identify capac- will be how to address evolving supply chains caused ity and demand of the multimodal system by determining by shifting trade patterns. This may force a rethinking issues and bottlenecks that affect the efficient flow of of current service delivery models as well as specific international freight as well as the competitiveness of metrics used to measure transportation system per- the system. formance, and will place a greater emphasis on the transportation system’s fluidity, reliability and resiliency. Trends and future issues While high fossil fuel prices provide development and exporting opportunities, they also present a significant Looking forward, an efficient, clean, safe and secure challenge to the transportation industry—the challenge transportation system accessible and integrated across of containing costs. All transportation modes are depen- all modes will continue to be vital to Canada’s com- dent on fossil fuels, and high energy prices have forced petitiveness. This integrated system will facilitate the industry to explore alternative sources of energy and movement of people around the world and enable areas for improved fuel efficiency. This challenge also Canadian goods to access new markets, stimulating presents an opportunity for the transportation industry wider economic activities, direct investments and pros- to become more environmentally sustainable and to perity in Canada. approach the issue of high fuel prices from a network- While the United States will remain a crucial trading wide perspective. partner for Canada, increased diversification can be Technology, meanwhile, can play an important role in expected in the future, with impacts on both freight and improving current infrastructure use and capacity, and will passenger transportation. This will present an opportu- remain at the forefront of the transportation system’s effi- nity to review policies, legislation and regulations under ciency, environmental, safety and security improvements. new circumstances. Canada’s transportation system must remain aligned with the country’s opportunities in the global marketplace. Pressure from emerging economies on the world’s renewable and non-renewable resources represent opportunities for Canada, particularly for its

4 Transportation2011 in Canada Introduction 3

Transportation links communities and reduces the impact of distance between people, products and services. It supports the country’s social and economic fabrics, and adjusts to changes and transformations within Canada’s society and economy.

Introduction About this report

Canada is defined, among other things, by its geogra- This report on the state of transportation in Canada is phy: a 10-million square-kilometre land mass with the tabled by the Minister of Transport, Infrastructure and longest land border and most extensive coastline in Communities of Canada in both Houses of Parliament. the world, fronting three different oceans; a diversified It is produced in compliance with Section 52 (2) of the landscape with a wealth of resources; and challenging 2007 Canada Transportation Act, which reads: topographical and meteorological conditions. Every five years, the report referred to in subsection 52 (1) Canada is also home to nearly 34 million inhabitants, shall be expanded to a comprehensive review of the state and greets more than 16 million foreign visitors every of transportation in Canada which shall include: year. It has an annual economic output of $1.8 trillion— the 14th largest in the world (15th by capita)—as well as (a) the financial performance of each mode of one of the most diversified economies. transportation and its contribution to the Canadian economy; Transportation in Canada operates against this back- drop by moving people and goods over small and (b) the extent to which carriers and modes of trans- large distances, across towns, regions, provinces, portation were provided resources, facilities and territories and the nation itself as well as to and from services at public expense; other countries around the world. Canada’s strategic (c) the extent to which carriers and modes of trans- location between Asia and Europe makes it a gate- portation received compensation, indirectly and way to the Americas—a role of particular importance in directly, for the resources, facilities and services today’s global marketplace. that were required to be provided as an imposed While the activities of Canada’s transportation ser- public duty; vice industry are highly diversified, several common (c.1) the long-term outlook and trends in transporta- values prevail among all stakeholders. These include a tion in Canada; and dedication to efficiency, a commitment to environmental responsibility, adherence to the highest standards of (d) any other transportation matters that the Minister safety, and the determination to provide Canadians with considers appropriate. a secure transportation system. These values anchor Transportation in Canada constitutes this mandatory Canada’s strategic transportation objectives and the comprehensive review since the Act’s amendment in cornerstone of the country’s federal department of 2007. It begins with a description of relevant economic transportation, Transport Canada. issues and how they impact the Canadian transportation system, and reviews public transportation expenditures

2011Transportation in Canada 5 3 Executive Summary and revenues as well as key developments in the four diverse and encompass a broad range of organiza- modes of transportation: air, marine, rail and road. These tions; proper care and attention was devoted to data modal chapters present industry overviews, highlights quality and reliability. However, the onus for data quality from the previous year, a recap of significant changes rests with the sources of data reported. To produce this that took place since the last comprehensive report report, the most current data available was used, which in 2006, and descriptions of key issues related to the was not always from 2011. This results in a slight varia- four values. tion of data periods from one mode to another. The report concludes with chapters on the transpor- Painting a complete picture of the state of trans- tation of dangerous goods; on gateways and corridors portation in Canada is a complex task, delimited by and global value chains; and on foreseeable trends and access to data. When possible, the scope of the report issues likely to affect Canada’s transportation system in extended beyond federal transportation responsibili- coming years. ties. Canada’s transportation system can be reviewed from local, regional, provincial, national as well as global The report, its Statistical Addendum and its perspectives. By addressing a mosaic of facts, trends Cartography Addendum are based on extensive fac- and issues across all modes, this report offers readers tual transportation data. Both addenda are heavily a perspective on the state of transportation in Canada. referenced in this report. The various data sources are

6 Transportation2011 in Canada Transportation and the Economy 4

After a period of economic crisis and natural disasters, 2011 was a year in which the path to recovery finally revealed itself. Canada weathered the downturn better than most, and is proceeding—with care—through still-tentative times.

4.1 Canada’s Economic 174,344 units in 2011 from 166,175 units in 2010, in spite of the federal government tightening mortgage regulations Performance in March, making it more difficult for some homebuyers to obtain financing needed to purchase a home. In 2011, Canada’s real gross domestic product (GDP) at market prices rose by 2.5% (compared to the pre- The personal savings rate fell in 2011 from 4.8% to vious year’s 3.2%). The country, however, has moved 3.8% the previous year. well beyond the -2.8% low of 2009 during the economic crisis (please see Addendum Table EC1). Drivers of growth While the first quarter of the year was strong, several temporary factors (including unanticipated disruptions in the energy sector due to unrest in the Middle East and Business investment North Africa, and supply chain interruptions caused by the Business investment continued to serve as an engine earthquake/tsunami disasters in Japan) caused second- of Canadian economic growth in 2011. Firms that had quarter growth to decline to an annual rate of -0.6%. delayed purchasing equipment during the recession As the impacts of these shocks abated, net exports began to buy in 2010 and continued into 2011, and rebounded and the economy followed suit, with third- investment in machinery and equipment (M&E) grew quarter growth of 4.2%. Yet, given weakened global by 13.7%. This was the second year in a row that M&E economic conditions due to low confidence in the U.S. investment climbed over 11%—surpassing the pre- economy and uncertainty over the European sovereign recession high. Driving this growth were falling prices debt and financial crisis, growth in the fourth quarter of machinery and equipment imports due to a strong slowed to 1.8%. Canadian dollar boosted by high commodity prices, as In Canada, final domestic demand grew by 3.0% in well as a growing shortage of skilled labour. 2011, decelerating from its 4.5% growth rate in 2010. Consumer spending slowed from 3.3% in 2010 to Consumer prices 2.2% in 2011. The expiration of government stimulus measures—such as the tax rebate on home renovation In 2011, the consumer price index (CPI) increased by projects—combined with slow income growth, a rising an annual average of 2.9%, compared to 1.8% in 2010. level of consumer debt and relatively high inflation on For the year as a whole, prices increased in all eight food, gasoline and energy prices, all contributed to the major components of the CPI, with gasoline and food erosion of household spending power. experiencing the largest increases. Following a 17.5% decline in 2009 and a 9.1% rise in 2010, gasoline prices Personal disposable income grew by 3.3% in 2011, increased by 20% in 2011—the largest annual average compared to 4.9% in 2010. Debt levels rose at a faster rise in a decade. Food prices rose 3.7% after increasing pace, aided by historically low interest rates that increased 1.4% the previous year. The cost of transportation went the ratio of household credit/market debt to personal dis- up 6.4% on average in 2011; this compares to a 4.3% posable income to 149%, from 145% in 2010. On the increase in 2010. In addition to paying higher prices for housing front, residential construction increased slightly to gasoline, consumers also paid more in passenger vehicle insurance premiums. On an annual basis, the Bank of

2011Transportation in Canada 7 4 Transportation and the Economy

Canada’s Core CPI increased 1.6% in 2011 compared to as a series of economic shocks perturbed the world 1.8% in 2010. The rise in 2011 was the smallest annual economy during the first half of the year, business con- average increase in the Core CPI since 2005. fidence was affected and economic activity slowed. As a result, the inventories-to-shipments ratio increased to The Canadian dollar 1.38 in June—its highest level for 2011. As the temporary shocks subsided, the ratio gradually decreased as The Canadian dollar remained strong in 2011. For most the number of shipments rebounded; by December, the of the year, the dollar traded close to or above par vis- inventory-to-shipment ratio was 1.29, reflecting a return à-vis the U.S. dollar. The average value of the Canadian to pre-recession levels of inventory stocks. dollar against the U.S. dollar was U.S.$0.989, compared The Ivey Purchasing Managers Index (PMI) is another to U.S.$1.029 in 2010. The dollar reached its lowest useful indicator for the transportation services sector. level in July, trading at U.S.$0.944, and also depreciated This economic index measures monthly changes in dol- in early October amid growing fears of another financial lars of purchases from a panel of purchasing managers crisis in the Eurozone, which caused investors to retreat from across the country. It is often used as an anticipa- to the American dollar. By the end of that month, how- tory indicator for transportation services, as it reflects ever, the Canadian dollar had returned to above parity the order book of businesses. A figure above 50 reflects and reached its highest trading point for the year at an increase, while below 50 is a decrease. In 2011, the U.S.$1.06. Canada’s healthy fiscal situation and strong PMI reflected the same pattern as the inventories-to- banking sector, the U.S.’s and Europe’s economic woes, shipments ratio: despite a strong start to the year with and upheaval in oil-producing nations (which caused the PMI posting levels of 70.8 and 73.2 in February and oil prices to rise) all contributed to the Canadian dollar March respectively, it experienced volatile fluctuations remaining close to or above parity throughout the year. ranging from 46.8 to 65.5 mid-year, but ended the year at 63.5 as businesses began to regain confidence and Transportation sector pick up their order books. In 2011, the transportation services sector represented In terms of passenger traffic, the observed slowdown 4.2%1 of Canada’s GDP, or $53 billion (see Table EC1). in global economic activity for 2011 as compared to Truck transportation represented the largest segment 2010 was apparent for air passenger traffic. Although of transportation services and accounted for 31% of the total number of enplaned and deplaned passengers the sector’s share of GDP; the air and rail segments in Canada increased by 3.2% in 2011, this marked a represented 12 and 11%, respectively, while water slowdown from the 4.4% increase in the total number of transportation represented about 2%. The remaining enplaned and deplaned passengers observed for 2010. output came from the transportation support and scenic The slowdown in air passenger traffic for 2011 stemmed and sightseeing activities segments, which includes air- not only from the growing global economic uncertainty, port operations, operations of terminals and harbours, but also from the sharp volatile increases in oil prices, and arrangement of freight transportation services. strongly correlated to jet fuel prices, observed in 2011. Given that fuel costs account for roughly 30 per cent When examining the transportation sector’s economic of an airlines’ operating expenses, in 2011 airlines were performance, the inventories-to-shipments ratio is useful forced to increase their prices and reduce capacity in to consider, as it reflects the level of activity in the freight order to recover the losses resulting from the large oil sector—if the economy is growing, inventories tend to price fluctuations. be low and shipments high, and demand for transportation services is healthy. Conversely, when the economy Conversely, strong inflationary pressures in 2011, slows, business activity decreases and inventories tend such as a 20% increase in gasoline prices along with to accumulate, with fewer shipments and thus a lower other factors, had a notable impact on Canadians’ dis- demand for transportation services. Throughout 2011 posable incomes and favoured more economical urban the inventories-to-shipments ratio reflected the uncer- modes. As a result, in 2011 the number of total urban tain global economic context. In January inventory passenger trips for the ten major Canadian urban tran- levels had returned to their normal pre-recession lev- sit operators2 increased 5.3% to 1.6 billion trips for the els and stood at 1.28, suggesting that businesses had year. This was a greater increase than the 4.2% increase a little over a month’s worth of inventories. However, observed in 2010.

1 Excludes warehousing and pipelines. 2 Passenger trips based on the 10 major Canadian urban transit operators, represents about 80 per cent of total urban transit traffic in Canada. The top 10 transit properties in Canada are: Toronto Transit Commission, Société de transport de Montréal, Vancouver Regional Transit System, OC Transpo(Ottawa), Calgary Transit, Edmonton Transit, Go Transit (Toronto), Réseau de transport de la capitale (RTC - Québec City), City of Winnipeg Transit System, Montreal Region Transit.

8 Transportation2011 in Canada Transportation and the Economy 4

The rail passenger traffic sector, which is a sector financial-market volatility and damaged investor and dependent on both domestic and international tourism, household confidence. The effects of the European was on the bottom end of a slow and uneven recov- sovereign debt crisis have rippled through most major ery for travel markets following the recession. In 2011 developed economies in the world, including the United this sector had not yet recovered from the recession. States, Canada’s largest trading partner. Nonetheless, the impacts from the slowdown in economic activity throughout 2011 were still apparent, but On the whole, the global economic environment in 2011 to a lesser degree than for the airline sector. The number was volatile, generating uncertainty and causing Canada’s of passengers recorded in 2011 was virtually unchanged trade balance to fluctuate from quarter to quarter. For the from the previous year and stood at roughly 4.09 million year, total merchandise trade, on a customs basis, was passengers, a very slight decrease from the 4.1 million $893 billion (see Tables EC6 and EC7), representing an passengers recorded in 2010. However, still shy from 11.2% increase from 2010. Total exports were $447 billion, the 4.5 million passengers recorded in 2008. increasing 12.1% from 2010 levels, while total imports were $445 billion, 10.4% greater than in 2010. This resulted in Overall, for 2011, growth experienced in the transpor- a trade surplus of $1.7 billion—an improvement over tation sector’s GDP surpassed the Canadian average. Canada’s trade deficit of $4.4 billion in 2010. On a year-over-year basis, the sector’s GDP growth increased by 3%, while that for all industries increased Canada’s international trade activity remains largely by 1.9%. This performance suggests that as demand for dependent on the health of the United States econ- Canada’s natural resources from emerging economies omy and is export-oriented. In 2011, Canada’s total becomes increasingly significant, traditional trading pat- merchandise trade with the U.S. was $551 billion and terns are changing. This, in turn, affects the rationale for represented 62% of Canada’s total trade activities (see using transportation services. Table EC6). Canada’s total merchandise exports to the U.S. were $330 billion, representing 74% of all of Canada’s merchandise exports, while imports from the 4.2 International Trade United States to Canada were $221 billion, representing about 50% of all of Canada’s imports. Over the past year, the U.S. economy experienced modest growth, 2011 Overview posting GDP growth of 1.7% (compared to 3.0% in 2010), not only as a result of the European debt crisis The main risks to the Canadian economy in 2011 were but also due to the country’s own domestic sovereign largely external, as the world economy experienced a debt issues. Confidence in U.S. policymaking hit new series of unexpected shocks. During the first half of lows in 2011, as political standoffs hampered compro- 2011, unrest in the Middle East and North Africa dis- mise on how to cut the U.S. long-term debt ratio. This rupted the world supply of oil. This caused oil prices resulted in growing uncertainty of the U.S. economy’s to reach record highs and bolstered the Canadian dol- direction and significantly damaged consumer and lar above parity. The persistently strong Canadian dollar business confidence. Despite historically low interest continued to be a challenge for Canadian exporters. rates, heightened risk aversion and low private sector In March, the devastating mega-earthquake/tsunami investment ensued. The fact that the fragile economic off the coast of Japan severely disrupted that country’s recovery in the U.S. was most evident in the truck trans- critical contributions to the global manufacturing supply portation sector is not surprising, given that 57% of the chain. This led to depressed world output, including in value of Canada’s trade with the United States is done Canada, in automotive as well as other manufacturing by road mode, while 17% is by rail, 16% by pipeline, 6% supply chains. Japan is Canada’s third largest trading by marine and 5% by air. partner in terms of exports. Furthermore, large-scale Canada’s total trade with the rest of the world in 2011 floods in Australia and the United States reduced demand was $342 billion (see Table EC7), and was import-oriented, and disrupted output in sectors such as agriculture and as roughly $117 billion were exports and $225 billion were coal. This caused supply shortages and price increases imports. As such, Canada had a trade deficit in 2011 that further hampered the global economy’s growth. of $107 billion with the rest of the world (excluding the In addition to the temporary shocks of 2011, the major U.S.). Canada’s second largest trading partner is China; element impeding a strong global economic recovery Canada’s total trade with China in 2011 was $64 billion, was Europe’s inability to quickly resolve and somewhat a 12.4% increase from 2010. Canadian exports to China contain its sovereign debt problems. This significantly were $16 billion, while imports from China were $48 billion. impacted global economic expansion by triggering

2011Transportation in Canada 9 4 Transportation and the Economy

Impact of the global recession sector has been delayed by the long and slow recovery in the U.S. economy. on Canada’s transportation The air transportation mode is also dependent on services sector international trade—more than half of the passengers that enplane or deplane at Canadian airports are travelling to The Canadian economy was impacted by the 2008–09 or from international destinations. In 2009, the air sector financial crisis but generally fared better than most other contracted by 3.6% as the number of Americans enter- countries through the recession. In 2009, the country’s ing Canada by plane dropped by 9%, and the number GDP3 contracted by 3.1%, but by 2010, GDP had sur- of tourists from the United Kingdom, Mexico and Japan passed its 2008 pre-recession levels, expanding by was also very low in 2009 and 2010. Table A18 shows 3.6% (see Table EC1) overall passenger enplanement and deplanement, and As with most other sectors of the economy, the reflects a 5.3% drop in volumes between 2008 and 2009. transportation services sector was impacted by the However, in 2010, the air sector’s GDP had expanded by recession. The sector as a whole contracted by 5% in 8.0%. This sector recovered the fastest from the reces- 2009, but by the second quarter of 2010 returned to its sion. The fact that the Canadian economy recovered pre-recession levels, and for 2010 as a whole expanded much more quickly from the effects of the recession than by 5.7%. However, each segment of the transporta- other countries resulted in Canadians travelling more, tion sector was impacted differently by the recession; both domestically and internationally. Growth in Canadian those segments most dependent on industrial activity international travel was particularly robust, as the strong and international trade—such as rail and water—were Canadian dollar made foreign destinations cheaper. impacted to a greater degree. Furthermore, the emergence of developing countries as economic powers also helped offset some of the losses, Rail and water are two transportation industries that as visitor counts from emerging markets—particularly have not yet fully recovered from the recession. Given China and India—have continued to rise.6 that two thirds of the goods carried by rail move across Canada’s land or sea borders, this sector is highly sen- The trucking sector also recovered fairly quickly from sitive to global economic conditions. In 2009, the rail the recession. In 2009, this sector’s GDP contracted sector’s GDP contracted by 13%, yet expanded by 11.5% by 6.7%. It reached its lowest point during the second in 2010. For 2011, the sector expanded only by 0.4%. quarter of 2009, but by the second quarter of 2010 As a result of the marked slowdown in global economic it had regained its pre-recession level and expanded activity in 2011, the rail sector’s GDP still remains below 8.1% for the year as a whole. The key characteristic that its 2008 pre-recession levels. helped the trucking sector recover from the recession is its reliance on the domestic economy—particularly Of the entire transportation sector, the water the retail, manufacturing and wholesale sectors. Given transportation sector fared the worst. This sector’s GDP that Canada’s economy has recovered faster than most contracted by 14.3% in 2009 and expanded only by 3.6% other countries from the recession, declines observed in 2010 and 1.0% in 2011. The Canadian water transpor- in other transportation sectors highly dependent on tation industry is highly dependent on international trade, international trade were much smaller for trucking 4 mostly U.S. markets. It is estimated that 40% of indus- firms. However, the impact of the recession on the U.S. try activity is derived from the international movement of economy, Canada’s largest trading partner, was partic- goods or foreign passengers. It is important to note that ularly evident in the trucking sector, where 57% of the in this context, water-borne traffic that passes through value of goods traded between Canada and the U.S are Canadian ports is not captured within the industry, since moved by truck. During the recession, the number of two- that traffic is carried by foreign-flagged ships. One reason way truck border crossings decreased from 11.5 million why water transportation has not recovered as quickly as to 9.8 million in 2009 (see Table RO19). In 2010, the num- rail is that a large part of the growth in rail-related exports ber of two-way truck border crossing increased to 10.5 was driven by Asia, and Canada does not have many million, and have remained at this level in 2011, therefore water transportation companies covering those interna- full recovery from the recession has not yet occurred. tional routes.5 The recovery in the water transportation

3 Refers to GDP at basic prices in 2002 constant dollars; All-industries by North American Industrial Classification System code. 4 Conference Board of Canada estimate. 5 Conference Board of Canada document produced for Transport Canada. 6 Conference Board of Canada document produced for Transport Canada.

10 Transportation2011 in Canada Transportation and the Economy 4

4.3 Demographics 4.4 fInancial performance One of Canada’s greatest long-term economic of major transporta- challenges is its aging population. In 2010, the num- tion stakeholders ber of Canadians aged 65 and older was 4.8 million, or 14.1% of the country’s total population. By 2030, this In 2010, Canada’s transportation industry registered is projected to reach 9.5 million, or 22.5% of the total strong growths in revenues and income as the economy population. In 2011, the 55-years-and-over age group recovered from the 2008–09 recession. A summary of formed one third of the working age population, up from the financial performance of the transportation industry one quarter 15 years ago. This demographic transition can be found in Table EC71. will see an increasing share of Canadians move out of their prime working age and into their retirement years, ir resulting in slower growth in the labour force. In fact, A the Parliamentary Budget Office projects that slower Canadian air carriers in 2010 had operating revenues of labour growth as a result of Canada’s ageing population $17.4 billion, up from $15.4 billion in 2009, representing will reduce annual average real GDP growth from 2.6% a 12.7% increase year over year. Operating expenses observed over 1977–2010 to 1.8% over 2011–2086. grew at a slower pace than revenues, increasing by 8% This is a structural issue that cuts across all regions and between 2009 and 2010. This translated into an indus- sectors of the economy, and one that sits front and centre try-wide profit of $868 million, up 581% compared to the in the transportation sector. During the last decade, the $127 million in profits reported in 2009. More detailed number of persons 55 years of age or older employed information on the financial performance of Canada’s in the transportation sector doubled. In 2011, of the major air carriers for 2011 can be found in Section 6.2. 843,400 people employed in the transportation sector, 22% were 55 years of age or older, compared to 11.4% Marine in 2000. Meanwhile, the number of people employed in the 15 to 24 age group has declined from 7.9% in 2000 Due to the discontinuance of Statistics Canada’s Annual to 5.9% in 2011, and those in the 25 to 54 age group fell Survey of Water Carriers, no information is available on to 72.3% in 2011 from 80.7% in 2000. As compared to the financial performance of the marine mode. the business sector in general, the number of employees in the 55 years of age or older group increased from 10% ail in 2000 to 17% in 2011, while those in the 25 to 54 age R group declined from 74% to 68% and those in the 15 to In 2010, Canadian rail freight carriers had operating 24 age group only declined by 1% from 2000 to 2011, revenues of $9.4 billion. This represents an increase going from 15% to 14%. of 12.2% from 2009 revenues of $8.4 billion, which In 2011, the water transportation mode of the declined 15.2% compared to 2008 revenues. Operating transportation sector had the largest number of older expenses increased 11.3% in 2010, reaching $7.5 bil- workers: roughly 27% of employees in that sector were in lion. This provided a favourable decrease in operating the 55 to 64 age group. However, the transit and ground ratio to 80.3%. More detailed information on the finan- passenger sector as well as the trucking sector also had cial performance of Canada’s major railways in 2011 a large number of older employees. The transit and group can be found in Section 8.2. passenger sector had 23% of its employees in the 55 to 64 age group, while the trucking sector had 17%. Road

It is predicted that labour shortages will affect the According to Statistics Canada’s Annual Trucking operations of the economy significantly in the com- Survey (ATS), the for-hire trucking industry posted a ing years. For example, persistent shortages will force 4.9% increase in operating revenue, from $38.9 bil- businesses to find new ways of increasing productivity lion 2009 to $40.8 billion in 2010. This compares to a levels—such as becoming more capital-intensive—in 4.6% increase in operating expenses, from $36.2 billion order to stay productive. in 2009 to $37.9 billion in 2010. The largest increase in operating expenses was fuel, at 12.2%.

2011Transportation in Canada 11 4 Transportation and the Economy

4.5 pRoductivity of the machinery equipment, among others. Tonne-kilometres increased 20.6% in 2010. Total productivity for the transportation sector sector rose 5.1%, due primarily to increases in labour (8.1%) and capital (11.4%) efficiencies. Overall transportation Passenger In 2011, Transport Canada conducted a study on productivity in the Canadian air and rail sectors. One Output in the passenger rail sector decreased by key finding was that labour productivity growth in 1.1% from 2009 to 2010. This was due to a reduc- the Canadian air and rail transportation sectors from tion in passenger counts in most corridors. Fuel and 1997–2010 outperformed that of the business sector. labour productivity helped offset a reduction in capital For example, output per labour advanced at a 5.0% efficiency to stabilize total productivity of the sector at average annual rate for air transport and 3.4% for rail 0.5% growth in 2010. transport, compared to only 1.3% in the business sector (see Tables EC68 and EC69). 4.6 Energy Prices and Usage Output levels in the transport sector—generally measured as tonne-kilometres or passenger-kilometres— For all segments of the transportation sector, energy grew 9.9% in 2010, as economic activity regained its costs represent an important part of operating expenses. footing from the 2009 global economic crisis. Public car- The fact that oil and energy prices dropped during the riers7 outpaced private carriers8 with a 13.7% increase in economic downturn helped reduce some of the sector’s output compared to 9.3%, respectively. Total factor pro- costs while revenues were low. However, a challenge ductivity (TFP) levels rose by 5.6%, which indicates that for the transportation sector is that energy prices are output increased more than the amount of input used to uncertain and can quickly fluctuate, making it difficult to produce it. In terms of mode-specific total factor produc- predict how these prices will affect operating costs on tivity levels, only the levels for the air and rail mode are an ongoing basis. reported. Due to data limitations, the TFP levels for the truck and marine modes cannot be examined here. Crude oil prices

Air The annual average price of crude oil continued to increase from its five-year low of U.S.$61.80 in 2009. The air sector raised its output by 8.1%, with TFP pro- The average price of a barrel of West Texas Intermediate ductivity levels increasing 3.1%. An increase in the (WTI) rose 19.6% from 2010 to U.S.$94.87 in 2011.9 efficiency of capital use (10.0%) helped offset a decline Meanwhile, the average annual price of Brent crude oil in labour productivity (-14.6%). The airline industry used reached a record $111.26 per barrel in 2011, up 39.8% 12.1% more labour in 2010 than in 2009, while output from 2010. In April 2011, the average price for Brent grew by only 8.1%. reached $123.26, the highest it’s been since July 2008 and the third highest ever in nominal value.10 Table EC63 provides more information on the price of crude oil for Rail both WTI and Brent. Energy analysts are increasingly of the view that the Freight price of Brent is a better proxy for the international price Total output for freight rail carriers in 2010 increased of oil, while WTI is a better proxy for the U.S. market. In 11.3% compared to 2009, but shipments of agricultural 2010, the price for both was on average almost iden- goods rose only 0.5%. Most of the growth in shipments tical, but 2011 brought a growing disparity between was seen in the category “Other Commodities”, which the two as Brent prices increased more rapidly than includes chemicals, petroleum, building materials and WTI prices. On average, the price for Brent was 17.3% higher than for WTI during 2011, with a peak difference

7 VIA Rail and urban transit operators. 8 Freight railways and airlines. 9 Source: Energy Information Administration. 10 Not taking inflation into account.

12 Transportation2011 in Canada Transportation and the Economy 4

of 31.9% in July 2011. This trend continued in the first Consumption quarter of 2012, as Brent prices rose 16.3% compared to 7.7% for WTI. Overall Canadian economy Refined fuels prices Energy consumption in the Canadian economy rose 2.1% from 2009 to 2010. This included increases in The retail price of unleaded motor gasoline climbed energy demanded in the mining, forestry, construction 19.6% from its average price in 2010. The 2011 national and agriculture sectors. Energy demand in the trans- average price for unleaded gasoline was $1.23 per litre, portation sector, including motor gasoline and diesel compared to $1.03 per litre in 2010. Crude oil remained consumption, increased 3.0%. roughly half (49.3%) of the total cost of the pump price, while taxes11 (30.7%), refinery operating margins Transportation sector (13.9%) and marketing operating margins (5.9%) made up the rest. Table EC64 provides retail gasoline prices Gasoline sales increased 1.1%, from 40.2 billion litres for select cities. in 2009 to 40.6 billion litres in 2010. This includes retail The 2011 Canadian average retail price of diesel pump sales as well as refinery sales of gasoline to the increased 23.5%, from $1.00 per litre in 2010 to $1.24 manufacturing and commercial sectors. Total sales of per litre in 2011. The 2011 price was comprised of crude diesel fuel rose 6.6%, from 16.5 billion litres in 2009 to oil (49.0%), taxes (24.4%), refinery operating margins 17.6 billion litres in 2010, which includes a substantial (18.3%) and marketing operating margins (8.1%). Table increase of 29.1% in refinery sales to rail companies. EC65 provides retail diesel prices for select cities while Retail pump sales of diesel grew 1.7%. Table EC66 provides a breakdown of the price compo- The domestic consumption of jet fuel declined by 1.0%, nents of road fuels. from 4.7 billion litres in 2009 to 3.4 billion litres in 2010. The Canadian price for jet fuel rose 32.1% from 2010 This includes a decrease of 7.0% in fuel sold to Canadian to $0.77 per litre in 2011. The 2011 average price is still airlines, which fell from 4.1 billion litres to 3.8 billion litres. lower than the historical high of $0.85 seen in 2008. The Total energy demand in the aviation sector fell 1.4%, from 13 price of aviation gasoline increased 16.3% from 2010 to 205 petajoules in 2009 to 203 petajoules in 2010. 2011, to reach $1.09 per litre. Marine energy consumption rose marginally from The average spot price12 of ultra-low sulphur number 117 petajoules in 2009 to 118 petajoules in 2010, while 2 diesel used for rail transportation rose 28.2%, to $0.81 rail energy consumption remained stable from 2009 to in 2011. 2010 at 88 petajoules. The average spot price of marine bunker fuel grew In the road mode, total energy demand climbed 2.8%, 32.6%, from $0.56 per litre in 2010 to $0.75 per litre from 2.05 petajoules in 2010 to 2.11 petajoules in 2011. in 2011. Alberta had the highest increase in use, consuming 7.0% more energy in 2010 than in 2009. Finally, pipe- It should be noted that for both aviation and marine, line energy consumption dropped almost 10.0%, from there are tax exemptions for fuel purchased for an inter- 137 petajoules in 2009 to 124 petajoules in 2010. national voyage. Table EC67 provides retail prices for aviation, marine and rail fuels. The data above show a strong dependency of the transportation sector on fossil fuels. As these fuels become increasingly expensive, the transportation sector is seeking innovative ways to reduce its dependency on them. In aviation, for example, the International Civil

11 Taxes that apply on gasoline prices include the federal excise tax of 10¢/l, a provincial fuel tax that varies between 6.2¢/l in the Yukon to 20.06¢/l in British Columbia, a local fuel tax in Montreal, Vancouver and Victoria, the 5% Goods and Services Tax (which is also charged on the aforementioned taxes) and the provincial sales tax or the provincial component of the Harmonized Sales Tax in Newfoundland and Labrador, Nova Scotia, New Brunswick, Quebec and Ontario. 12 A spot price reflects the price paid for immediate purchase and delivery, as opposed to a contract where terms are agreed in the present but delivery and payment will take place in the future. 13 When modelling energy consumption due to economic activity, it is sometimes useful to convert various fuels to a common energy measurement, one of which is known as a petajoule. The conversion multiplier for one million litres of a certain fuel to a petajoule is as follows: motor gasoline = 0.035, diesel = 0.0383, turbo jet fuel = 0.0374, aviation gasoline = 0.03352, heavy fuel oil = 0.0425.

2011Transportation in Canada 13 4 Transportation and the Economy

Aviation Organization’s Committee on Aviation and use of public transit all reduce dependency on fossil Environment Protection has been examining issues fuels. This will not only help the industry contain its oper- such as alternative fuels with a lower carbon foot- ating costs, but will also help it be more environmentally print, improved air navigation to reduce fuel burn and sustainable by reducing its carbon footprint. Sections advanced materials to make lighter aircraft. Canada’s 6.5, 7.5, 8.5 and 9.5 all present various ways in which railways have invested heavily in purchasing new, more the air, marine, rail and road modes manage to reduce fuel efficient locomotives, which has translated into their fuel consumption. reduced energy consumption per tonne-kilometre carried (see Table EN29). In the marine mode, programs like However, while individual modes have shown some shore power help ships reduce their fuel consumption success at reducing their energy intensity (i.e., their while docked by using the local electricity grid rather energy use per unit of output), they still need to decou- than their own engines. Slow steaming—meaning to ple economic growth from growth in energy use to help reduce the cruising speed of ships—has also helped reduce the total level of emissions from transportation. them become more fuel efficient. Finally, in the road mode, improved engines, long-combination vehicles, aerodynamic aids, electric and hybrid vehicles, and the

14 Transportation2011 in Canada Government Expenditures and Revenues 5 from Transportation

All three levels of government in Canada provide funds to and collect revenues from the transportation sector. This chapter highlights key public expenditures and revenues as they pertain to transportation.

5.1 Introduction funding pertains to intra-provincial transportation and municipal funding pertains to local transportation. Of Transportation funding is shared across all three levels course, exceptions do exist; Addendum tables G1 to G7 of government. Generally, federal funding pertains to provide a detailed breakdown of government expendi- interprovincial or international transportation, provincial tures and revenues in transportation.

Government expenditures in transportation Level of government Selected expenditures TOTAL (million dollars) Federal Provincial Municipal (2011–12) (2010–11) (2010–11) CATSA 515.0 n/a n/a 515.0 Subsidies 39.5 n/a n/a 39.5 Airports 35.6 n/a n/a 35.6 Air Other 283.6 50.9 n/a 334.5 Sub-Total 873.7 50.9 n/a 924.6 Coast Guard 689.0 n/a n/a 689.0 Ferry Subsidies 290.8 n/a n/a 290.8 Ports 175.0 n/a n/a 175.0

Marine Other 218.1 232.8 n/a 450.9 Sub-Total 1,372.9 232.8 n/a 1,605.7 Subsidy to VIA Rail Canada 493.8 n/a n/a 493.8 Grade Crossing improvement 14.6 n/a n/a 14.6

Rail Other 9.2 74.1 n/a 83.3 Sub-Total 517.6 74.1 n/a 591.7 Infrastructure Canada 670.7 n/a n/a 1,170.6 Other federal departments 284.0 n/a n/a 284.0 Bridges 156.6 n/a n/a 156.6 Transit 24.1 4,156.1 2,693.5 6,873.7 Other 23.0 11,855.5 11,644.7 23,523.1

Road and transit Sub-Total 1,158.4 16,011.6 14,338.2 32,008.1 OTHER AND MULTIMODAL 631.0 378.0 468.5 1,477.5

Total 4,553.6 16,747.4 14,806.7 36,107.7

Please see Addendum Tables G1, G2, G3 and G5 for more details

2011Transportation in Canada 15 5 Government Expenditures and Revenues from Transportation

5.2 Air Expenditures Table 5.1 The National Airport System (NAS) was created as a result of the National Airports Policy of 1994, and ACAP Investments 2007–2011 comprises 26 airports, which are operated by local, non- Province Amount ($M) profit, airport authorities. However, Transport Canada still owns land and infrastructures at 17 non-National British Columbia 21.0 Airport System (NAS)1 airports across the country as Alberta 14.1 well as one water aerodrome (see table A31). Saskatchewan 0.9 In 2010–11, Transport Canada’s actual costs to Manitoba 20.5 operate these airports were $15.5 million, plus $15.0 Ontario 41.9 million for capital projects. In the same period, Transport Quebec 25.5 Canada also collected approximately $8.1 million in revenues. In 2011–12, the estimated costs for operating New Brunswick 2.0 these airports are $15.5 million plus $25.2 million for Nova Scotia 1.1 capital projects. For 2011–12, total projected revenues Newfoundland and Labrador 2.7 are $8.9 million. Nunavut 16.1 The National Airports Policy2 also created the Airport Northwest Territories 4.6 3 Capital Assistance Program (ACAP) in 1995 to help Yukon Territory 1.6 eligible airports with safety-related capital projects. To Total 152.2 be eligible, an airport must receive year-round regular scheduled passenger service that generates minimum traffic of 1,000 passengers per year; meet airport Source: Transport Canada, ACAP program certification requirements; and not be owned by the federal government. the Yukon 29. The three Territories own and operate their In 2011–12, ACAP funded 29 new safety-related respective capital’s airports. The remainder of Canada’s projects at 23 airports at a total estimated cost of more airports, particularly those with commercial services, than $21 million. These projects included rehabilitation are generally owned and operated by the community of runways and airside manoeuvring surfaces, purchas- they serve. ing of heavy airside mobile equipment and installation of wildlife fencing. Since its inception in 1995, ACAP Both federal and provincial governments also invest has funded 680 safety-related projects at 171 airports regularly in major airports to maintain or improve for a total of over $559 million (see Map 11 on ACAP infrastructure and help those airports to remain com- projects). For the 2007–2011 period alone, ACAP invest- petitive. In 2011, the federal government committed ments reached $152.2 million across the country, broken $52.9 million from the Gateways and Border Crossings down by province4 as shown on the table to the right (see Fund (GBCF) to assist seven Eastern Canadian Airport Tables 5.1 and A4). Authorities, and much of this funding was matched by contributions from other levels of government. This Most provinces and territories also own a number of $52.9 million in funding was shared by Quebec City for a airports and aerodromes across the country, usually in runway upgrade ($21.6 million), Fredericton for runway remote or northern areas. For example, Newfoundland and lighting upgrades ($5.4 million), Moncton for a run- 5 and Labrador owns and operates 21 airports , Quebec way extension ($4 million), Charlottetown for a terminal 27 (in addition to seven heliports), Ontario 29, Manitoba expansion ($1.2 million), Halifax for a runway extension 23, Saskatchewan 17, the Northwest Territories 27 and

1 More information on the NAS available at http://www.tc.gc.ca/eng/programs/airports-policy-nas-1129.htm 2 See http://www.tc.gc.ca/eng/programs/airports-policy-menu-71.htm 3 See http://www.tc.gc.ca/eng/programs/airports-acap-menu-327.htm 4 There is no funding for Prince Edward Island, as the only passenger airport in that province—in Charlottetown—is a Transport Canada-owned airport and thus ineligible for ACAP funding. 5 Eight on the island of Newfoundland and 13 on the Labrador coast.

16 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

($9 million), Gander for a runway upgrade ($3.3 million) $1,200 for airports with unpaved runways and $2,400 and St. John’s for a new instrument landing system for airports with paved runways. MAAP funding totals ($8.6 million). These projects also benefited from $24.7 $87,000 annually. Manitoba owns and operates 23 million in provincial funding. airports in the northern part of the province, at an annual expense approaching $11 million. These air- While the Government of Canada does not directly ports mostly serve First Nations communities with subsidize air transport, some provinces have estab- no other year-round transportation connection to the lished programs to attract new air services, maintain outside world. As well, Manitoba exempts (by refund) existing airport assets, or help passengers from remote international cargo flights from the provincial aviation areas access more affordable fares. Examples include: fuel tax. Domestic cargo flights pay a reduced rate of • Taking Flight: An Air Access Strategy for Newfoundland provincial aviation fuel tax. and Labrador, introduced in October 2010 to enhance • The Saskatchewan Ministry of Highways and air access to, from and within the province. The Infrastructure has maintained its Community Airport five-year strategy is currently funded at $5 mil- Partnership (CAP) program since 2007–08. It provides lion in the form of two rebate programs: one for capital contributions on a 50/50 cost-shared basis to provincial airport authorities’ business development ini- rehabilitate and upgrade strategic regional commu- tiatives and another for air carriers’ route development nity airports. This program was funded at $700,000 and advertising. in 2011. Saskatchewan also offers the Airport • In New Brunswick, the province is also contributing Assistance Program, which focuses on operations $500,000 towards runway rehabilitation and lighting and maintenance assistance to community airports. and navigational system upgrades at the Miramichi This program has been in place since 1988, and in airport. In addition, some airports qualify for provincial 2011 provided $110,000. property tax exemptions, and international carriers • Alberta’s Strategic Transportation Infrastructure that refuel in the province may qualify for a fuel tax Grant—Community Airport Program provides funding rebate of 2.5 cents/litre. assistance to community-owned, public-use airports • In Quebec, the Air Transportation Assistance Program, for their rehabilitation and construction projects. created in 2006 and renewed in 2011, is providing Approximately $2.7 million in projects was approved $1 million per year for a three-year period ending in in 2010. In addition, municipalities may choose to 2014. The program aims to share financial risk related fund projects that support the infrastructure needs to the start-up of new air services or the resumption of of regional and community airports under Alberta’s an abandoned service. It will also contribute to mar- Municipal Sustainability Initiative (MSI). Municipalities ket studies for the implementation of new services or have committed $9.58 million towards capital and find methods and procedures more respectful of the operating projects for airports under MSI since the environment. The program also co-funds infrastruc- program’s launch in 2007. As for provincial fuel taxes, ture projects that improve access to airports. Finally, international flights have enjoyed an exemption from the province’s Airfare Reduction Program, which pro- having to pay them since 2004. vided $932,000 in 2011, allows residents of remote • British Columbia, through its Transportation and isolated regions to travel at a reduced cost for Partnerships Program (TPP) and various federal/ personal reasons or when accompanying a patient provincial infrastructure programs, has contributed who requires healthcare services, through a partial $65.4 million to projects at 36 community airports refund of their airfare. since 2003. The TPP does not have a budget allo- • The Ontario Ministry of Transportation, through its cation in the current year. In addition, the province Remote Airport Program, owns and operates 29 has a number of travel support programs, such as remote airports and provides subsidies for basic infra- the Air Ambulance Program, Medical Transportation structure and other capital works. Supplement, Crime Victim Assistance Program and Travel Assistance Program, all of which can assist res- • The Manitoba Airport Assistance Program (MAAP), idents with associated travel costs, including aviation. which has been in place for about four decades, pro- On another note, in early 2012, British Columbia elimi- vides operational and maintenance grants to airports nated its provincial fuel tax on all international flights. that do not receive scheduled services. Grants are

2011Transportation in Canada 17 5 Government Expenditures and Revenues from Transportation

Safety airport operators pay for a portion of the overall cost of enhanced aviation security policing. Until March On the safety front, Canada has been active in the 2008, the program was managed by the Canadian Air International Civil Aviation Organisation (ICAO)’s tech- Transport Security Authority (CATSA)—the agency nical cooperation initiatives in the Asia-Pacific Region responsible for screening people and baggage at since 2003. Specifically, Canada participates in the Canadian airports. Since then, it has been managed Cooperative Development of Operational Safety and by Transport Canada. In 2011, the four recipients of Continuing Airworthiness Program (COSCAP) for the contribution program were Kelowna International North Asia, which provides assistance to the People’s Airport, Hamilton International Airport, Greater London Republic of China, the Democratic People’s Republic of International Airport, and Victoria International Airport. Korea, Mongolia, and the Republic of Korea. The 2010 federal budget allocated CATSA and The program aims to enhance the safety and efficiency Transport Canada $1.5 billion over five years to make of air transport by strengthening the flight safety over- Canada’s domestic air transportation system less vul- sight in these countries. It establishes a regional core nerable to terrorist attacks and improve the security of of highly qualified flight operations and airworthiness all air travellers. In addition, that budget allocated $95.7 inspectors to perform the full range of flight safety million over five years for air cargo security, as well as inspection and certification functions. $17.6 million per year in ongoing funding. Transport Canada’s overall contribution to COSCAP The Government of Canada budgeted $21 million over takes two forms: grants and in-kind contributions. Through five years to upgrade elements of CATSA’s checked grants, the department contributes up to $130,000 a baggage screening equipment that are reaching their year to the project. The last contribution was in 2009 end of life. As these upgrades are completed at airports, for $130,000. Transport Canada will also make a air travellers flying from Canadian airports with U.S. pre- contribution in 2012 for a similar amount. In-kind contri- clearance facilities will no longer be required to have butions include: their baggage re-screened if connecting at a U.S. airport, making connections through U.S. cities easier and • participation in Steering Committee meetings for the reducing the risk of bags not being placed on connect- North Asia program; ing flights. While these changes will make Canada-U.S. • provision of technical expertise, including a Transport air travel more convenient, they will also maintain a high Canada technical expert who serves as the head of level of security. the North Asia program; In 2011, CATSA also improved its service delivery • provision of subject matter experts to provide training model—which involves third-party screening contrac- courses as training needs are identified; and tors—by creating a new, four-region contracting model. Reducing the number of regions from six to four, and • provision of other technical assistance as requested. the number of contracts from 17 to four, has increased CATSA’s operational and management efficiency. The Through ICAO, Transport Canada also supports the new contracts came into force on November 1, 2011 operation and financing of facilities and services pro- and expire March 31, 2017, with an option to extend vided by Denmark (Greenland) and Iceland for aircraft for up to an additional five years. These contracts are flying across the North Atlantic. In 2011, Canada con- worth up to $2 billion over the 2011–2017 period. Table tributed approximately $50,000 to these countries to A31 shows the companies now responsible for deliver- support these services. ing screening services at designated airports in Canada.

Security 5.3 Marine Expenditures Finally, on the security front, the Airport Policing Contribution Program (APCP) was instituted in April Ferries 2002 during a time of significant financial difficulty for airports following the terrorist events of 9/11. The aim Ferry services often act as an extension of the road of the contribution program was to provide funding to network, providing linkages where bridge construc- help airports manage in an environment of increased tion would be technically and economically unfeasible. security costs. The program currently helps smaller

18 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

Through the Ferries Services Contribution Program, • $1 million from each of the provinces of New Transport Canada is responsible for ensuring that feder- Brunswick and Nova Scotia to support the Saint John, ally owned ferry assets contribute to a safe and reliable NB to Digby, NS ferry service operated by Bay Ferries transportation system, and supports three interprovin- Ltd., in addition to the federal contribution received cial ferry services in Eastern Canada: by the operator. Nova Scotia’s contribution is part of the $8.3 million it estimates it will have spent on ferries • between Cap-aux-Meules, Îles-de-la-Madeleine, QC in 2011–12. and Souris, PEI, operated by CTMA Traversier Ltée (CTMA) since 1971; • Operation of four cable and three self-propelled ferries by the government of New Brunswick. Of the • between Saint John, NB and Digby, NS, operated by 14 mostly year-round ferry services in New Brunswick, Bay Ferries Ltd (BFL); and 11 are provided by the province’s 15 vessels and are • between Wood Islands, PEI and Caribou, NS operated free of charge. These carried 4.5 million passengers by Northumberland Ferries Ltd. (NFL) since 1941. in 2010–11. The province spent $45 million to build a new ferry—the MS Grand Manan Adventure, link- In support of these services, Transport Canada owns ing North Head on Grand Manan Island and Blacks four ferry vessels and six shore facilities—leased to Harbour, NB—and covers operating costs of the ferry. operators for a nominal amount—as well as the ferry terminal in Yarmouth, NS. • A subsidy from Quebec’s Ministry of Transportation for five year-round ferry services and eight contracted- In 2010–11 Transport Canada spent $31 million on the out seasonal or long-haul services operated by the Ferry Services Contribution Program; the amount for provincial Crown corporation Société des traversiers 2011–12 is projected to be approximately $33.4 million. du Québec. In 2010–11, the amount of that subsidy In 2011 the federal government began working with the was $82.3 million. provinces and local communities to develop a long-term approach to these services; that collaboration continues • Operation of six ferries on five routes in the northern into 2012. part of Manitoba by the provincial government that carried 98,305 vehicles in 2010–11. In 2010, the federal government provided an additional $76.4 million for these ferry services: $31.7 million in • Operation of 13 seasonal ferry services—12 of which are Budget 2010 and $44.7 million announced in November free of charge—by the Saskatchewan Ministry of Highways 2010. The latter was part of a three-year extension of and Transportation. In 2010–11, the Saskatchewan gov- ferry services to March 31, 2014. ernment spent $3.4 million on this service. On the west coast, British Columbia has had sole • Operation of seven ferries by Alberta Transportation responsibility for its coastal ferry services since 1977, as part of its highway network, at a cost of $1.1 million when the governments of Canada and British Columbia in 2010–11. entered into an agreement whereby BC would assume • A $153-million grant from the province of British sole responsibility for ferry and coastal services in return Columbia in 2010–11 for BC Ferries’ operation of its for an ongoing indexed grant. The initial amount of 25 routes and 35 vessels in addition to the province’s the grant was $8 million per year; in 2011–12, it was indexed federal grant. $27.5 million.

Provincial governments also provide important fund- Transport Canada ports ing for ferry services. Their contributions include: Under the National Marine Policy framework, the • $1.3 million in Newfoundland and Labrador for Port Divestiture Program was established to transfer Labrador Marine to provide ferry service between ownership and operation of regional/local ports from the west coast of Newfoundland and Blanc Sablon, Transport Canada to other federal departments, provin- Quebec. In 2011–12, Newfoundland and Labrador cial/territorial governments, or local interests, including estimates spending $110 million on its marine opera- municipalities. In 2007, the Port Divestiture Program tions, including $39.3 million for the construction of was renewed for five years, ending in March 2012. The ferry vessels. department received $61 million to transfer ports and $51 million to operate and maintain non-divested ports.

2011Transportation in Canada 19 5 Government Expenditures and Revenues from Transportation

All ports divested with an operating agreement Canada to seven provincial governments that provide receive contribution funding, which is used to operate marine training and certification through provincial and maintain the existing port property in compliance marine training institutes. The program has enabled the with safety and operating standards. transfer of eight marine training simulators, with contributions, between 2007 and 2010 to British Columbia, In 2010–11, two ports were divested: Port Stanley Ontario, Nova Scotia and Newfoundland and Labrador. in Ontario, with a contribution of $13.4 million, and In 2011, the remaining two Transport Canada-owned Bamfield East in British Columbia, with a contribu- simulators were transferred to Quebec through a con- tion of $620,000. As well, six parcels of land in Victoria tribution agreement valued at $1.45 million, which Harbour were sold, generating $1.44 million in revenues. concluded all simulator transfers. Over the next few Additional divestitures are expected to be completed years, Transport Canada will divest itself of its last MED before March 31, 2012. training facility at Port Colborne, Ontario, as well as In 2010–11, actual operating costs for Transport other miscellaneous MED training assets at provincial Canada’s remaining 69 ports was $18.5 million plus marine training institutes. $7.6 million for capital projects. Transport Canada also collected approximately $10.5 million in revenues. Projected costs for Transport Canada to operate its 5.4 Rail Expenditures remaining 67 ports in 2011–12 are $12.7 million plus $12 million for capital projects, while anticipated revenues Passenger rail are approximately $10.2 million. The federal government provided $481.6 million in fund- Boating safety ing to VIA Rail in 2011. Of this, $264.8 million was used for operations and $216.8 million for capital investment. Historically, the federal government has leveraged the Operating revenues totalled $287.2 million in 2011 and support of a wide-reaching network of volunteer-based expenses were $552 million. organizations to promote boating safety. In June 2008, The capital expenditure is part of a $923-million con- Transport Canada established the five-year Boating tribution that runs from 2007 to 2014. The goals of this Safety Class Contribution Program, with a maximum program are to ensure VIA Rail’s equipment, stations funding level of $1.75 million until March 31, 2013. The and other capital assets are in a good state of repair, program’s overall goal is to promote boating safety in to improve safety and accessibility, and to improve Canada by providing financial contributions for projects passenger service, with particular emphasis on the that raise boating safety awareness and focus on safe Quebec–Windsor Corridor, which accounts for the bulk boating practices. of VIA Rail’s ridership. Most of the projects are undertaken by not-for-profit For rolling stock, this program will: organizations dispersed across Canada. Since 2009, a total of 26 projects have received funding. The pro- • rebuild the F40 locomotive fleet used nationally and gram’s targeted approach involves ranking proposals the Light Rapid and Comfortable (LRC) fleet used in as per Transport Canada’s priorities, based on the the Quebec–Windsor Corridor; Canadian Red Cross report, Boating Immersion and Trauma Deaths in Canada: 18 Years of Research.6 • refurbish and rebuild part of the fleet of cars used on the western transcontinental train;

Training assets • rebuild the Rail Diesel Cars (RDC) used on VIA Rail’s regional and remote services; and The Divestiture of Marine Training Assets program • make accessibility, safety and operational enhancements was established in 2006 to formalize the ending of to the Renaissance cars used on the Montreal–Halifax the Simulated Electronic Navigation (SEN) and Marine route and the Quebec City–Windsor Corridor. Emergency Duties (MED) training programs. The objective of the program is to transfer ownership of SEN and In 2011, VIA spent $70.3 million on the projects listed MED training equipment and facilities from Transport above. Total costs for these projects will be $288.5 million.

6 See http://www.redcross.ca/cmslib/general/2011_boating_fnl.pdf

20 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

Infrastructure improvements are being made in the Federal funding provided under the RRPRSCCP aims Montreal–Ottawa–Toronto triangle and in southwest- to ensure the continuation of safe, reliable and sustain- ern Ontario on the Georgetown–Kitchener–London able regional and remote passenger rail services and and Chatham–Windsor route segments. Improvements provides funding necessary to ensure the continuation include the installation of additional main line track and of non-VIA remote and regional passenger rail services. sidings, new and upgraded signalling to control train For three of the four proponents, the federal government movements, upgraded road crossing protection, and is the only government that contributes to the railways. new fencing and bridge repairs on VIA-owned tracks. In 2011, VIA Rail spent $123.7 million on these infra- ail safety structure projects; the total cost of the project will be R $474.5 million. Several public funding initiatives are aimed at improv- VIA Rail is also undertaking a major program to ing rail safety. As part of Canada’s Economic Action upgrade its stations. In 2011, a new station was com- Plan, Budget 2009 allocated a total of $72 million for pleted in Smiths Falls, Ontario and major repairs were rail safety over five years, plus an additional $15 mil- completed in Vancouver and Winnipeg. Construction lion on an ongoing basis. Also allocated was $44 million began on station improvement in Belleville, Oshawa, over five years for rail safety initiatives that enhance Cobourg and Windsor. In 2011, VIA Rail spent $7.3 regulatory oversight and enforcement capacity, and for million on stations. The total cost of the project will be research and development projects to advance new $60 million. rail safety technologies, as well as $28 million over five years for the Grade Crossing Improvement Program The Government of Canada also contributes finan- that aims to improve safety at public grade crossings cially to four regional and remote passenger rail services across Canada. through its Regional and Remote Passenger Rail Services Class Contribution Program (RRPRSCCP). The Grade Crossing Improvement Program program supports two Aboriginal-owned remote passenger rail services: the Keewatin Railway Company, The Grade Crossing Improvement Program (GCIP), located in northern Manitoba between The Pas and funded under section 12 of the Railway Safety Act7 Pukatawagan; and Tshiuetin Rail Transportation, (RSA), is designed to cover up to 80% of the costs of a located in northeastern Quebec and western Labrador crossing improvement project. Funding for construction between Sept-Iles and Schefferville. A third remote pas- costs applies to safety improvements only, and does senger service, the Algoma Central Railway, owned by not include future maintenance costs. The authorities CN Rail and located in northwestern Ontario between involved (usually road authorities and railways) negoti- Sault Ste. Marie and Hearst also receives support under ate responsibility for the remaining costs. Examples of this program. Remote rail services provide access to eligible expenditures include the: the national transportation system for communities with no other year-round surface transportation options. The • installation of flashing lights, bells and gates; fourth remote service, Ontario Northland, is a provin- • addition of gates or extra lights to existing signal systems; cial Crown agency of the Province of Ontario and also receives funding from the provincial government. • interconnection of crossing signals to nearby highway traffic signals; and Under the RRPRSCCP, the federal government directed $14.9 million in 2011 to four shortline railways • modification of nearby intersections, including the as shown on Table 5.2: Keewatin Railway Company addition of traffic control signals. (Manitoba), $2.0 million; Ontario Northland Transportation In 2011–12, Transport Canada approved funding for Commission (Ontario), $2.5 million; Algoma Central 810 projects across Canada, with total funding of nearly Railway (Ontario), $2.2 million; and Tshiuetin Rail Trans $14 million. The number of projects increased significantly portation (Quebec and Labrador), $8.2 million. Combined, from previous years due to a renewed focus on replace- these four carriers transported 67,725 passengers in ment of incandescent lights with LEDs, as encouraged by 2011: Keewatin Railway Company, 4,687 passengers; Transport Canada to meet the new standard. Ontario Northland Transportation Commission, 39,579 passengers; Algoma Central railway, 5,666 passengers; and Tshiuetin Rail Transportation, 17,793 passengers.

7 See http://www.tc.gc.ca/eng/acts-regulations/acts-1985s4-32.htm

2011Transportation in Canada 21 5 Government Expenditures and Revenues from Transportation

Table 5.2 Statistics for Passenger Regional and Remote Rail Services for 2011

Length of Number of Operating Revenue-Tonne Employees– Federal Subsidy Railway Passengers– Revenues1 Kilometres2 2011 (owned, leased) 2011 627 miles owned 67,725 $11,440,429 229,460 65 full-time $14,900,000 505.2 miles leased 76 seasonal

1 Revenues generated by the four recipients. The majority of the recipients reported an operating deficit. 2 Applicable for only two recipients.

Grade Crossing Closure Program of international or interprovincial structures. Nevertheless, in order to promote and maintain efficient transportation Funded under section 12.1 of the Railway Safety Act, the of goods and people, the federal government provides Grade Crossing Closure Program (GCCP) is designed significant funding for key strategic road infrastructure. to provide a maximum investment of $5,000 for closing Launched in 2007, the Building Canada Plan focuses a restricted crossing, and $20,000 for closing an unre- on building a stronger, safer and better Canada through stricted crossing. Eligible crossings include those where modern, world-class public infrastructure. This seven- a safety concern or hazard exists, or where closing the year plan supports projects that contribute to cleaner crossing will divert users to an adjacent crossing that air and water, safer roads, shorter commutes, and bet- has a higher level of safety. ter communities. In addition, Canada’s Economic Action In 2011–12, Transport Canada approved funding Plan announced in Budget 2009 was designed to fight for 44 projects across Canada, with total funding of the effects of the global recession by providing signifi- approximately $250,000. cant infrastructure-related stimuli across the country. The federal government delivers a broad range of Operation Lifesaver infrastructure programs, providing flexible funding support for public infrastructure projects together with Operation Lifesaver promotes public awareness to help provincial, territorial, municipal, not-for-profit and pri- save lives and reduce suffering from injuries incurred at vate sector infrastructure partners. Funding activities highway/railway crossings and from trespassing on rail- are broadly grouped as follows: way property. In 2011–12, Transport Canada provided a contribution of $300,000 to the Railway Association of 1. Building Canada Plan: $33 billion in programs Canada to support this project’s objectives. (announced in Budget 2007). 2. Economic Action Plan: $5.5 billion in programs 5.5 Road Expenditures (announced in Budget 2009). 3. Other programs: over $6 billion in programs that Road infrastructure funding is shared between all three are winding down, including Canada Strategic levels of government, with most coming from provincial/ Infrastructure Fund, Border Infrastructure Fund territorial and municipal governments, because they and Gateways and Border Crossings Fund. own and operate the majority of Canada’s road network. The federal government, in addition to providing road Federal investments made under these programs funding, also owns some key infrastructure and regu- support infrastructure projects, including those that lates interprovincial and international trucking. align with the National Highway System (NHS) and public transit properties. Federal government’s role in With respect to the NHS alone, the 2009 report from road infrastructure the Council of Ministers Responsible for Transportation and Highway Safety indicated that investments in the The Constitution Act assigned jurisdiction over infra- NHS grew from $2.3 billion in 2006 to $4.6 billion in structure works such as highways, roads and streets to 2009. Of that amount, $547 million came from the fed- provincial and territorial governments, with the exception eral government.

22 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

Significant federal investments in infrastructure over Bridge Authority [Peace Bridge Authority] and the St. the past decade, together with leveraged investments Lawrence Seaway Management Corporation). from funding partners, have contributed to the ongoing renewal and improvement of Canada’s core public The Federal Bridge Corporation Limited and its three infrastructure.8 The age of infrastructure is often used subsidiaries—Jacques Cartier and Champlain Bridges as an indication of its current state; the average age of Incorporated, Seaway International Bridge Corporation, Canada’s core public infrastructure peaked in 2001 at Ltd., and St. Mary’s River Bridge Company—together 17.0 years. Between 2001 and 2010, this average age own, manage and operate several significant bridges in has fallen to 14.7 years—including a drop of a full year Ontario and Quebec. In 2011–12 the Corporation was between 2008 and 2010. Unprecedented infrastructure responsible for more than $216 million in operating and investments made across the country by all orders of capital funding. The corporation also looks after major government—including those made in the context of multi-year projects, including: Canada’s Economic Action Plan—are likely to contrib- • customs plaza rehabilitation in Sault Ste. Marie; ute to a further decline in the average age of Canada’s public infrastructure in the years to come. • new low-level North Channel Bridge in Cornwall; • rehabilitation of Honoré Mercier Bridge in Montreal; • major repair of the Champlain Bridge in Montreal; and Confederation Bridge May 31, 2012 marks the Confederation Bridge’s 15th year of operation. • safety repair and asset preservation program The bridge connects the provinces of Prince Edward Island and New in Montreal for Highway 15, the Bonaventure Brunswick and fulfils the Government of Canada’s constitutional Expressway, the Jacques Cartier Bridge, the Honoré obligation to provide a link between the island and the mainland. Mercier Bridge, the Melocheville Tunnel and the Transport Canada assumed federal responsibility in 1999 and over- Champlain Bridge Ice Control Structure. sees the operating agreement with Strait Crossing Development Inc. (SCDI), which is responsible for the day–to-day operations of the bridge. The 12.9-kilometre bridge is one of Canada’s top engi- ublic transit neering achievements of the 20th century and is the world’s longest P bridge over ice-covered water. The bridge replaced the Borden-Cape Tormentine Ferry Service, resulting in a reduction of more than Public transit is primarily a municipal responsibility in 44,000 tonnes of greenhouse gas emissions per year. The bridge has Canada. However, in some cases, provinces play an reduced travel time to and from the island from 45 minutes down important role, either in providing operational or capi- to 15 minutes and eliminated the wait time prior to crossing. The tal funding or in supporting long-term planning, since bridge’s owner and management won the Gold Award for Leadership municipalities are a provincial responsibility. Provincial in Public-Private Partnerships from the Canadian Council for Public- involvement is closely tied to the concentration of urban Private Partnerships in 2009. populations, as public transit is a more prevalent means of transportation in large metropolitan areas. Several examples of provincial government involvement in transit systems are described below. ederal bridges F Direct operating and capital funding The federal government has an inventory of some 500 Prince Edward Island’s 2011 budget set aside highway-related bridges open to the public, which $342,000 to enhance public transit in Charlottetown, represent a very small subset of all bridges in Canada Stratford and Cornwall and to operate the ‘7-5-3’ transit (approximately 1%). These bridge assets fall within line between Summerside and Charlottetown. The prov- four federal departments/agencies: Public Works and ince of Quebec’s transit policy has eight programs that Government Services Canada, Parks Canada, the provided $800 million between 2007 and 2011. These National Capital Commission, and Transport Canada. programs helped finance the purchase of new equip- The first three own and operate the structures them- ment, making buses and taxis accessible, promoting selves, while Transport Canada’s portfolio of bridges is transit and absorbing Montreal’s subway deficit. The managed by Crown corporations or shared governance Ontario government budgeted $125 million in 2011 in regimes (such as Federal Bridge Corporation Limited, transit operating funding. Manitoba provided $44 million Blue Water Bridge Canada, Buffalo and Fort Erie Public

8 Statistics Canada defines “core public infrastructure” as comprising the following asset categories: bridges, roads, water, wastewater, public transit, and cultural and recreational facilities.

2011Transportation in Canada 23 5 Government Expenditures and Revenues from Transportation in its 2011 budget to support transit, with $41 million by municipalities and commuters alone. For example, allocated to Winnipeg alone. In Saskatchewan’s 2011 in Montreal, expansion of subway and commuter train budget, the province provided $2.9 million in oper- networks is financed by the province, as is the purchase ating funds and $275,000 in capital funds through its of new subway cars. In Ontario, the new $8.2-billion Transit Assistance for People with Disabilities program. Eglinton-Scarborough Crosstown rapid transit link British Columbia provided $6.9 million to Translink to will be financed entirely by the provincial government, support the U-Pass program, which offers transit passes through Metrolinx. In the Vancouver area, the prov- to students at Vancouver’s two universities, Simon ince will contribute $583 million to the new $1.4-billion Fraser and the University of British Columbia. Evergreen Skytrain line between Burnaby and Coquitlam (see Section 9.4). Provincial agencies as transit operators General funding In Quebec, the Metropolitan Transportation Agency (Agence métropolitaine de transport [AMT]) plans met- Provinces also transfer funds to municipalities for ropolitan transit in the greater Montreal area. It operates general purposes; public transit services, when offered the region’s commuter rail network and coordinates to municipalities, can be one ‘general purpose’ that various express bus services as well a metropolitan- benefits from such funds. wide payment structure. AMT is financed by clients, the municipalities it serves and the provincial government, Public transit, by definition, entails some form of which was expected to contribute $7.1 million to AMT public cost-sharing participation. Usually, major capital through one of its eight transit funding programs.9 In projects are fully or mostly financed by various levels Ontario, Metrolinx coordinates and integrates all modes of government while transit passenger fares usually of transportation in the Greater Toronto and Hamilton cover a share of the operating costs, the balance being Area. Metrolinx launched The Big Move: Transforming financed by different levels of government or dedicated Transportation in the Greater Toronto and Hamilton Area taxes. Figure RO23 and Table RO23A shows the sources in September 2008. Metrolinx has three operating divi- of operating funding at a national level and for selected sions: GO Transit (trains and buses), Air Rail Link, and transit companies across the country. For transit author- Presto (electronic regional fare card). Metrolinx received ities in Table RO23A, outside of Southern Ontario, $68 million in direct grants from the Ontario govern- fares cover between a third to half of the transit comment in 2009–10. On the west coast, BC Transit is the pany’s operating costs. Southern Ontario—particularly provincial agency responsible for transit outside the Metrolinx, the Ontario Government agency responsible Greater Vancouver Regional District, and is financed by for GO Transit—has some of the highest cost recovery the province ($114.1 million) and the 58 communities it ratios, with close to 86% of operating expenses being serves ($55.4 million from all communities). BC Transit covered by fare and other revenues. Dedicated taxes, contracts out operations of its 1,028 vehicles to 38 dif- such as a gas tax, represent a relatively small amount of ferent companies or agencies. revenues, if any, with the exception of Translink, which draws from a diversified, dedicated tax base from prop- Dedicated taxation erty, fuel, and parking taxes as well as power levies. Some provinces have chosen to redirect part of specific tax or transport-related fee revenues directly to Federal Public Transit Tax Credit public transit. In Quebec, for example, AMT received This tax credit became effective July 1, 2006 and was $56.1 million from vehicle registrations and $102.5 mil- designed to ease the financial barrier preventing greater lion from Quebec’s gas tax, including an additional tax utilization of mass transit for transportation in urban levy on gasoline sold in the Montreal metropolitan area areas. The program initially allowed individuals to claim and whose proceeds go towards AMT’s transit system. a non-refundable tax credit for the cost of monthly pub- Ontario’s 2011 budget called for a transfer of $311 mil- lic transit passes or passes of a longer duration. The lion in gas tax revenues to transit, while BC’s budget tax credit has since been extended to electronic fare transferred $323 million in gas taxes to Translink. cards and weekly passes used on an ongoing basis. Capital funding for large projects The program aimed to increase transit use by making it more affordable, reducing traffic congestion in urban Some provinces provide funding for large transit- areas, and lessening environmental impacts of urban related infrastructure projects that could not be financed transportation.

9 AMT’s financing comes from the Programme d’aide gouvernementale à l’amélioration des services en transport en commun.

24 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

Intercity bus since 2006, the Canadian National Road Safety Vision 2010 (RSV 2010) cost-shared contribution program has Intercity bus transit does not generally receive direct supported related research and outreach activities. The public funding. Its model in Canada is usually based on contribution program was designed to support RSV provincial governments allowing companies to operate 2010 and to provide a focal point to leverage partner a monopoly for certain key “trunk routes”, with profits funds to help make Canadian roads safer. The program cross-subsidizing less-travelled regional routes. One was renewed for one year in 2011–12 and funded an exception is in Manitoba, where the provincial gov- additional eight projects. Over the life of the program, ernment subsidizes Greyhound Canada’s services; in it successfully provided seed money of $1.3 million 2011–12, this subsidy was valued at $3.9 million, and at and leveraged $1.9 million, or approximately 60% of $3.12 million for 2010–11. total funds, in partner monies to advance road safety research and outreach programs. Road safety funding Intelligent transportation systems The provinces and territories spend over $100 million per year for road safety. Through a multi-year contri- Under the Strategic Highway Infrastructure Program bution program, Transport Canada shares in the cost (SHIP), Transport Canada invested $131,327, matched of advancing national consistency, harmonization and by public partners, on two Intelligent Transportation implementation of the National Safety Code. The con- Systems (ITS) projects. In collaboration with British tribution program, which runs from 2009 to 2015, will Columbia, the first project involved a research project enable $26.7 million to be transferred from the federal related to Freight Security. The second project, in col- government to the provinces and territories. laboration with the Agence Métropolitaine de Transport de Montréal, funded a system to deliver traveller infor- In the context of the National Safety Code (NSC), in mation (e.g. train delays) to customers via their personal 2011, the federal government executed multi-year con- digital devices. tribution agreements (2009–10 to 2014–15) with each of the provinces and territories to share in the costs to advance national consistency and harmonization and to Technology at the border work towards establishing a national regulatory framework for motor carriers. The program will help ensure Under the Security and Prosperity Partnership (SPP) that all jurisdictions build a harmonized safety fitness initiative, Transport Canada has contributed $2.3 framework that provides for the safe transportation of million to the total $4.6-million cost for the installa- passengers and goods while minimizing compliance tion of border wait-time measurement systems at and regulatory costs. This approach to the regulation of four Canada-U.S. border crossings (Aldergrove and motor carriers represents Canada’s consensus choice Sumas in British Columbia, and the Peace Bridge and as the most efficient and effective approach for the safe Queenston-Lewiston Bridges in Niagara Falls, Ontario). regulation of motor carriers. The NSC program contrib- Up-to-the-minute wait-time information will be made utes towards Canada’s economic growth and social available to border and transportation agencies to bet- development, as well as ensuring high standards for a ter manage their resources, and to drivers to make safe transportation system. informed decisions about when and where to cross the border. Canada executed a multi-year contribution agreement (2009–10 to 2014–15) with the Canadian Council Also under the SPP, Transport Canada spent $1.1 of Motor Transport Administrators (CCMTA) to help million, which was matched by public partners. This develop and maintain Canadian motor vehicle instruc- includes a project with Whatcom County in Washington tor, inspector and commercial vehicle driver training State to develop a shared Canada-U.S. database to materials. The uniformity and quality of inspections are collect and disseminate border-related information to essential to the fair and equitable treatment of motor improve cross-border movements. Transport Canada’s carriers under federal jurisdiction, which is a key part of spending also includes work with New Brunswick to Transport Canada’s mandate under the Motor Vehicle create a regional ITS border architecture to optimize the Transport Act. Annual funding provided for this activity planning and deployment of advanced technology on is up to a maximum of $50,000 per year. In addition, cross-border routes.

2011Transportation in Canada 25 5 Government Expenditures and Revenues from Transportation

Environment and road transportation training, professional development, and the development of materials and resources. Between 2007 and 2011, $9.3 million was invested in ecoMOBILITY. Federal programs to promote sustainable Information about the program’s conclusion in 2012 road transportation and the projects it supported is available on the ecoMO- The federal government invested $463 million between BILITY website.11 2007 and 2011 into programs promoting sustainable Moving On Sustainable Transportation transportation, mainly in the road mode. Transport Canada established the Moving On Sustainable ecoAUTO Rebate Program Transportation (MOST) Program to financially support edu- The ecoAUTO Rebate Program was designed to pro- cational awareness and analytical projects that stimulate mote greater adoption of fuel-efficient vehicles by the development of innovative tools, approaches and providing financial incentives toward their purchase. practices aimed at making sustainable transportation a The program, administered by Transport Canada and reality. The program is slated to end in 2012; information delivered in partnership with Service Canada, offered about the program and the funded projects is available Canadians a cash incentive—in the form of a $1,000 to on the MOST website.12 $2,000 rebate—by buying or leasing a more fuel-efficient Retire Your Ride vehicle. The program issued more than 169,200 rebates, totalling $264 million between 2007 and 2011. Retire your Ride is a national vehicle scrapping program created for Canadians as an incentive to retire their older, ecoENERGY for Personal Vehicles Program more polluting vehicles (model year 1995 and older). The ecoENERGY for Personal Vehicles Program was Eligible individuals receive a free annual transit pass, designed to assist Canadians with buying, driving, and membership in a car-sharing program, a rebate on the maintaining their vehicles in a manner that reduces fuel purchase of a newer vehicle (model year 2004 and later), consumption and greenhouse gas emissions. Several or $300 cash. The primary goals of the program were to information-based initiatives were created, including a reduce smog-forming emissions and GHG emissions by Fuel Consumption Guide, a training curriculum for nov- promoting sustainable transportation alternatives. ice drivers, and awareness campaigns for experienced The program was delivered by a national not-for-profit drivers that focused on idle reduction, tire inflation, and organization and a network of provincial delivery orga- ecoDriving (improved driving habits). Resulting informa- nizations. Announced in Budget 2007 and ended on tion products of these initiatives are available on the March 31, 2011, the program spent a total of $92 mil- program’s website.10 Between 2007 and 2011, $21 million. Detailed program results can be found on the Retire lion was spent on program efforts. Your Ride website.13 ecoMOBILITY The ecoMOBILITY Program was designed to address 5.6 Multimodal Expenditures the financial and informational barriers preventing municipal stakeholders from implementing transporta- Reducing the environmental footprint tion demand management initiatives aimed at shifting personal automobile travel to other modes, reducing of transportation the number and length of car trips, and shifting trips to The Government of Canada has committed, by the year less congested times and routes. The program offers 2020, to reduce national GHG emissions by 17% from financial support to municipalities in their efforts to steer their 2005 levels. Additionally, the government is work- residents towards less polluting forms of transporta- ing to reduce air pollutant emissions, including nitrogen tion, providing financial assistance with transportation oxides (NO ), sulphur oxides (SO ), particulate matter demand management (TDM) projects that reduce emis- x x (PM ), volatile organic compounds (VOCs), and carbon sions. ecoMOBILITY is also helping build national 2.5 monoxide (CO). capacity to implement TDM measures through research,

10 See http://oee.nrcan.gc.ca/transportation/personal/17604 11 See http://www.tc.gc.ca/eng/programs/environment-ecomobility-menu-eng-144.htm 12 See http://www.tc.gc.ca/eng/programs/environment-most-menu-711.htm 13 See http://www.retireyourride.ca/home.aspx

26 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

In Budget 2011, the government announced the For 2010–11, the RRAB had a $1.7-million budget and allocation of $48 million over two years to develop $700,000 in kind, with Transport Canada contributing transportation sector regulations and next-generation $1.2 million and $69,000 in kind. Thirty three projects clean transportation initiatives. were underway during the course of 2010–11. Technical work on 11 projects was completed and reports The ecoFreight program describing the work performed and results achieved are undergoing the publication process. Summaries Transport Canada’s ecoFREIGHT program engaged the of these reports are currently being prepared by the freight transportation industry in a greater uptake of tech- RRAB Technical Committee in order to identify results nologies and practices that reduce fuel consumption, air of research in a timely fashion. Complete reports will be contaminants, and GHG emissions. The program came available for download at a future date from an RRAB into effect in April 2007 and ended in March 2011. The website currently in development. In 2010–11, the program included six initiatives, described in Table G8. RRAB worked to successfully establish a Canadian Rail Research Laboratory focusing on Ground Hazards and Supporting transportation research Winter Operations at the University of Alberta, which could become part of the Association of American Research and development (R&D) is essential to Railroads (AAR) Affiliated Laboratory Program with three support innovation, and provides key science-based American universities. inputs into policy and regulatory decision making. In the area of dangerous goods, Transport Canada was To undertake R&D and share financial and project risks, involved in several research projects in 2011, including: Transport Canada partners with other government departments, academia, and the private sector. These • Investigation of Multiple Tank Car Rollover Derailments partnerships invigorate the innovation process for the Related to Double Shelf Couplers and its Solutions, overall public good, while also taking into consideration where Transport Canada worked with the National various stakeholder needs. R&D alliances also allow Research Council of Canada to better understand Transport Canada to leverage at least two dollars in tank car domino rollover derailments. R&D support for each dollar it invests. • Assessing the Toxicity of the Transport of Petroleum Over the past few years, Transport Canada maintained Sour Crude Oil, which provides Transport Canada a number of socio-economic research (SER) invento- with important data and information regarding proper ries. This enabled the department to identify areas of classification, safety marking and methods of con- socio-economic research underway or planned for the tainment selection for petroleum crude oil during upcoming fiscal year in an effort to determine syner- transport. The objective is to correlate the hydrogen gies and opportunities for collaboration. To this end, sulphide concentration in petroleum sour crude oil to the inventory assists in planning and coordination and the toxic vapours it generates during transportation in in showcasing socio-economic research initiatives (both highway tanks. in-house and external). More importantly, it serves as a valuable tool to ensure research spending is efficient On the international stage, Canada is an active partici- and effective. pant at the International Transportation Forum/Organisation for Economic Cooperation and Development’s Joint In 2009–10, Transport Canada spent approximately Transportation Research Center (JTRC). It contributes $250,000 on five SER studies. During 2010–11, Transport €40,000 a year to the International Transportation Forum Canada spent approximately $537,900 on 12 different to support the JTRC’s program of work. SER studies, and in the 2011–12 year, the department spent approximately $94,300 on five SER studies. The Railway Research Advisory Board (RRAB) has 5.7 Government Revenues been an advisory body to Transport Canada and, since from Transportation 1996, has been almost exclusively concerned with safety-related research and development (R&D) in line Transportation activities generate revenues for govern- with the mandate accorded to it by Transport Canada, ments in Canada (see table G4). The most significant reflecting the department’s priority. source of revenues is taxes applied on motor fuels— gasoline and diesel fuel as primary sources of energy powering transportation vehicles in Canada. Taxes are levied by the federal, provincial and territorial governments.

2011Transportation in Canada 27 5 Government Expenditures and Revenues from Transportation

Government revenues from transportation

Level of government Selected Revenues TOTAL (million dollars) Federal Provincial (2011–12) (2010–11) Air Travellers Security Charge 618.1 n/a 618.1 Airport ground lease (est.) 256.2 n/a 256.2 Aircraft services 36.1 n/a 36.1 Air Other 21.6 n/a 21.6 Sub-Total 932.0 n/a 932.0 Coast Guard services 39.7 n/a 39.7 Returns from Port Authorities 15.7 n/a 15.7 Harbour fees 10.0 n/a 10.0

Marine Other 8.1 n/a 8.1 Sub-Total 73.6 n/a 73.6 Leases of hopper cars 14.4 n/a 14.4

Rail Sub-Total 14.4 n/a 14.4 Road fuel taxes (2010–11) 4,574.2 7,256.4 11,830.6 Road safety fees 4.9 n/a 4.9

Road PWGSC Bridges 0.3 n/a 0.3 Sub-Total 4,579.5 7,256.4 11,835.9 Other fuel taxes (2010–11) 213.0 n/a 213.0 Licenses n/a 3,693.3 3,693.3 Sales tax equivalent n/a 1,352.3 1,352.3 Other revenues 12.0 n/a 12.0 Multimodal Sub-Total 225.0 5,045.5 5,270.5 Total 5,824.4 12,301.9 18,126.4

Please see Addendum Table G4 for more details

Tax applied to motor fuel sold to consumers generates Provinces and territories in Canada also place excise revenue for governments and differs based on the taxes on these motor fuels and in some provinces, a type of fuel, the province/territory/region and the date provincial sales tax (PST), which may be combined with of purchase. the GST into a single harmonized sales tax (HST in the Atlantic region, Ontario and British Columbia) is added Like most countries, Canada has excise taxes on as well.14 Quebec calculates its fuels sales tax after the gasoline and diesel motor fuels (propane, natural gas, GST. Within some provinces, the fuel tax is applied at ethanol and biodiesel are exempt). The federal excise a different rate in metropolitan areas (e.g. Montreal, tax is fixed—10¢/litre on gasoline and 4¢/litre on diesel Greater Vancouver, Victoria) or certain bordering regions fuel. Therefore, the share of the pump price attribut- with another Canadian province. Across Canada, total able to the tax fluctuates. In addition, a federal sales tax motor fuel taxes vary greatly, from 17.0¢/litre in the (GST) of 5% is added across the country. Yukon to 41.01¢/litre in Greater Vancouver.

14 HST, GST, or GST + PST, where applicable, are calculated on the retail price that includes excise taxes, and are applied after manufacturers’ and retailers’ costs and profit margins. Unlike excise taxes, since these sales tax are a percentage of the retail price, the amount collected will vary propor- tionally to the price, even though the rate itself is fixed.

28 Transportation2011 in Canada Government Expenditures and Revenues from Transportation 5

The Government of Canada collects about $5 billion by air travellers who principally and directly benefit per year in excise taxes on gasoline, diesel, and aviation from the Canadian air travel security system. ATSC fuel, as well as approximately $1.6 billion per year from rates have been adjusted several times, since proceeds GST revenues on gasoline and diesel (net of input tax must ensure revenues roughly equivalent to expenses credits). Provinces and territories gather more than $8 over time. ATSC revenues include any applicable GST billion annually in fuel tax revenues. or the federal portion of the HST. The ATSC applies to flights between 89 designated airports in Canada Fuel tax exemptions exist for international transpor- where passenger pre-boarding screening is conducted tation. For example, the federal fuel excise tax does by CATSA. For transborder and international travel, the not apply to international flights, nor do most provin- ATSC generally applies only to flights departing from cial fuel sale taxes, except in Ontario. In February 2012, Canada; foreign governments may impose similar secu- British Columbia eliminated provincial fuel taxes on fuel rity charges on return travel. ATSC rates were increased used by international flights. For road and rail, a dis- in 2010. Annual proceeds from the ATSC are approxi- tance-based formula is used to allocate fuel taxes to mately $400 million. jurisdictions within which transportation occurs, rather than the jurisdiction in which the vehicle was fuelled. Airport leases yield an annual sum of approximately $250 million, which is calculated through a formula The second most important source of government that applies an escalating rate to an airport’s gross rev- revenues from transportation activities is licensing and enues. Canadian airports are federal assets developed registration fees tied to the issuance of drivers’ licences and paid for by taxpayers. Rents therefore constitute a and vehicle registration/licences. As with fuel taxes, sig- return on assets paid for by all Canadians. Under the nificant variations in these fees can be found across the government’s airport operations commercialization country, especially in annual fees for drivers’ licences. policy, airports were leased to non-government enti- Provinces and territories collect $3.5 billion annually in ties. Four airports—Vancouver, Calgary, Edmonton and licences and fees. Montreal—were transferred to local airport authorities Various other sources of transportation-related pro- (LAAs) in 1992. In 1994, the National Airport Policy per- ceeds generate roughly $800 million annually at the mitted the establishment of Canadian Airport Authorities federal level—$370 million from different Transport on different principles than the LAAs. Canada levies and $430 million from other federal department fees and charges. Of these other sources, two are most significant: the Air Travellers Security Charge (ATSC) and the airport lease. The ATSC came into effect in April 2002 to fund the air travel security system, which includes the Canadian Air Transport Security Authority (CATSA)—the federal authority responsible for the security screening of air passengers and their baggage. In addition to CATSA, the air travel security system includes Transport Canada regulations and oversight as well as the placement of Royal Canadian Mounted Police officers on selected domestic and international flights. The ATSC is payable

2011Transportation in Canada 29 5 Government Expenditures and Revenues from Transportation

30 Transportation2011 in Canada Air Transportation 6

An economic downturn. Record-high fuel prices. New entrants to the field soaring to success; new tools and policies advancing safety and security. 2007–2011 was an eventful half-decade for Canada’s aviation sector

6.1 oVERVIEw of international air carriers, such as Air Canada, WestJet, Jazz, Air Transat and Sunwing as well as a number of Air Transportation smaller regional carriers and freighter operators. Air transport is an important component of Canada’s Transport Canada sets and enforces all airport safety overall transportation mix, with local, regional, national and security standards, certifies and regulates all air- and international airlines flying passengers and cargo to ports, and ensures that Canada’s more than 34,000 civil destinations across the country and around the world. aircraft (see Addendum Table A9) conform to national and international standards. Canada’s air sector depends on its 1,889 aerodromes1, including 26 airports that are part of the National The Canadian Transportation Agency—an independent, Airports System2 (NAS); 570 certified airports, heliports quasi-judicial, federal administrative tribunal with a and waterdromes that support scheduled and non- mandate set out in the Canada Transportation Act— scheduled flights; and 1,297 registered aerodromes administers the air transport licensing regime. That and 22 other aerodromes (see Addendum Table A1). regime requires domestic air services operators—in Of Canada’s aerodromes, more than 55% are land addition to having an operating certificate issued by aerodromes, 26% are heliports and 19% are water Transport Canada—to be majority-owned and controlled aerodromes. NAS airports3 are owned by Transport by Canadians and have proper liability insurance. Canada and operated by non-for-profit, non-share The Canadian Transportation Agency also verifies the capitalairport authorities. Canada’s 26 NAS airports financial fitness of applicants starting operations and handle roughly 90% of all scheduled passengers and oversees licensing of international scheduled and non- cargo volumes in Canada, are particularly important to scheduled services to and from Canada, administering Canada’s trade (see Addendum Tables A22, A23, A24, the permit system for international charter operations. and A25) and tourism industries, and contribute to This protects advance payments received by airlines national prosperity and international competitiveness. for international passenger charter flights originating Canada also has smaller registered and certified in Canada. airports and certified heliports, some of which serve communities without highway access—places where Scheduled international commercial air transport aviation is the only year-round transportation option. services between two countries are governed by bilateral air transport agreements. Since the inception At the end of 2011, 1,497 air operators held 2,224 of the Blue Sky Policy in 2006, Canada has proactively Transport Canada-issued air operator certificates4: 768 pursued more liberalized agreements. By the end of were domestic, 358 were scheduled international and 2011 Canada had bilateral air transport relations with 1,098 were non-scheduled international licence authori- 98 partners, including open agreements covering 40 ties (see Addendum Table A6). Canada is home to large countries (see Addendum Table A12).

1 Figure accurate as of February 2, 2012. 2 The NAS includes airports in all national, provincial and territorial capitals, as well as airports with annual traffic of 200,000 passengers or more. 3 Except for Kelowna, Whitehorse, Yellowknife and Iqaluit 4 An operator can hold multiple certificates.

2011Transportation in Canada 31 6 Air Transportation

A large proportion of aircraft in Canada is used for –– WestJet reported a net profit of $148.7 million on general aviation (GA), often the only service provided revenues of $3.1 billion. Its EBITDAR was $596.8 in many Canadian airports, particularly in Northern million and its operating profit was $256.6 million. Canada as well as the first rung in the career ascension of aspiring pilots and aircraft mechanics. –– Chorus Aviation, parent of Jazz Aviation, reported a net profit of $68.1 million on revenues of $1.7 billion. NAV CANADA, a privately run, not-for-profit corpora- Its EBITDAR was $38 million and its operating profit tion that owns and operates Canada’s civil air navigation was $102 million. system, oversees the safe and orderly flow of air traffic st in Canadian airspace, in compliance with provisions in –– For the fiscal year ending October 31 2011, Transat the Aeronautics Act. A.T. a tour operator that owns Air Transat, reported a net loss of $12.2 billion on revenues of $3.7 bil- Finally, the Canadian Air Transport Security Authority lion. It should be noted that these figures reflect the (CATSA) is responsible for security screening at desig- entire group and not just the Air Transat component, nated Canadian airports and operates under provisions which is not reported separately. in the Aeronautics Act. CATSA is a Canadian Crown corporation created in 2002 under the Canadian Air Transport • Canada’s air cargo trade in 2011 grew 9.2% from Security Authority Act and reports to the Government of 2010 to reach $110 billion, with the volume of revenue Canada through the Minister of Transport. cargo coming into and being sent from Canadian airports totalling 739 million tonnes, a 9.1% decrease from the previous year (see Table A19C). 6.2 2011 Year in Review • Canada’s passenger air carriers continued to tightly manage supply, keeping it balanced with demand; Economic Framework and 2011’s high load factors demonstrate the success of these efforts. Most carriers’ yields7 improved reflecting infrastructure their ability to increase fares and offset higher costs— such as fuel—while maintaining and even improving • In 2011, passenger traffic at Canadian airports viability. In 2011, Air Canada reported a 3.3% increase increased by 2.5% compared to 2010, to a total of in yield compared to 2010, while WestJet reported an 78.4 million travellers. Year over year, domestic, 8.3% increase. That said, seat sales remained com- Canada-U.S. and other international traffic increased mon, particularly among carriers serving the Eastern by 2.4, 1.6 and 0.4%, respectively. Overall, Canadian Triangle (Montreal-Toronto and Toronto-Ottawa). airports weathered the economic downturn of 2008–09 successfully and are now positioned for growth. (see • Clause 27 of An Act to amend the Canada Transportation Addendum Tables A19A and A19B) Act and the Railway Safety Act and to make conse- quential amendments to other Acts came into effect, • In terms of carrier-specific performance, Air Canada setting in motion the development of regulations by and its regional affiliates transported almost 34 million the Canadian Transportation Agency—regulations that 5 passengers and posted a load factor of 81.6%, while will require air carriers operating in Canada to reflect WestJet carried more than 16 million passengers all fees and taxes in their advertised fares. Air Canada, and posted a load factor of 79.7%. Porter Airlines WestJet and Porter began voluntarily advertising all carried 2.1 million passengers and posted a load fac- inclusive fares during the winter of 2012. tor of 61.7%. Major scheduled carriers and charters reported an overall load factor of about 73% in 2011 • In 2011, Canada concluded new or expanded air compared to 74.1% in 2010. transport agreements with a number of countries around the world. These countries included Brazil, • From a financial standpoint, of note in 2011: Mexico, Japan and China. In addition, other agree- –– Air Canada reported a net loss of $249 million on ments were negotiated in 2011 but had not yet been revenues of $11.6 billion. Its EBITDAR6 was $1.2 bil- announced at time of printing. lion and its operating profit was $179 million.

5 The ratio of occupied seats to available seats. 6 Earnings Before Interest, Taxes, Depreciation, Amortization and Rent. It is the airline equivalent of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), but rent is added to adjust for the fact that some airlines rely more on leasing aircraft than owning them, which would create distortions with EBITDA. 7 Revenue per passenger-kilometre.

32 Transportation2011 in Canada Air Transportation 6

• The year 2011 witnessed a few changes on the aviation • On October 30, 2011, a new 51,000-m2 terminal build- landscape (see Addendum Table A11). Most impor- ing was opened at the James Armstrong Richardson tantly, in May, Sky Regional, a division of Skyservice Winnipeg International Airport. This terminal build- Business Aviation, launched its operations under the ing, with an annual capacity of 5 million passengers, Air Canada Express banner, offering 93 flights per was designed by the world famous architect César week (up to 15 flights per day) between Montreal and Pelli. The new terminal is considered to be one of the Toronto Island (Billy Bishop Airport) with a fleet of five greenest in North America and cost $200 million. The Canadian-built Bombardier Q-400. This marked a project is part of a $585-million redevelopment plan return of the Air Canada brand to the Toronto Island at the airport. The new terminal, with its 11 jet bridges airport after a five-year hiatus. and seven ground-loading gates replaces the older terminal built in 1964—now slated for demolition— • A number of new routes were launched by Canadian that had 10 jet bridges and one ground-loading gate. carriers in 2011. Amongst them, Air Canada started new flights between Gander and Toronto, Montreal • The redevelopment of Edmonton City Centre Airport and Antigua as well as new flights to Toronto Island. (Blatchford Field) continued in 2011 with the award by WestJet launched new routes between Orange the City of Edmonton of a contract to create a master County and either Vancouver or Calgary and between plan for the 217-hectare site. The airport still has one Las Vegas and Prince George, Hamilton or London, active runway and a NAV Canada control tower. as well as a number of new routes to Mexico or the Caribbean. Air Transat began serving Istanbul and nvironment Lisbon from Montreal, Birmingham or Faro from E Toronto and Glasgow or Manchester from Calgary or • The domestic aviation sector produced 8.5 mega- Vancouver. Finally, Porter Airlines opened three new tonnes (Mt) of carbon dioxide equivalent (CO2e) in destinations from Toronto Island: Charlottetown, Sault 2008 (see figure EN7). Of domestic greenhouse gas Ste. Marie and Burlington, Vermont. (GHG) emissions created by transportation, 5% were • Three new international carriers began year-round generated by aviation—only 1% of Canada’s total scheduled service to Canada in 2011: Qatar Airways emissions. started thrice-weekly service between Montreal • In 2009, aviation accounted for the following from the and Doha using a Boeing B-777-200 aircraft; China transportation sector: 2% of PM emissions, 6% of Southern started three weekly flights between 2.5 SOx emissions, 7% of NOx emissions, 2% of VOC Vancouver and Guangzhou, also with a Boeing 777- emissions and 1% of CO emissions8 (See figure EN8). 200; and COPA launched four flights a week between Toronto and Panama City using a Boeing B737-700. • Canadian aviation fuel standards for Jet A and Jet A-1 (see Addendum Table A14) fuels9 were amended in 2011 to allow up to a 50% blend of synthetic source material in jet fuel, which • On the cargo side, China Southern inaugurated the could reduce net GHG emissions. first freighter service between Vancouver and Mainland China, with three weekly Boeing 777-200F flights to • The International Civil Aviation Organization’s (ICAO) Shanghai. Qatar Cargo launched a weekly Boeing Committee on Aviation Environmental Protection 777-F freighter flight between Luxemburg, Toronto (CAEP) continued to work on its priorities of developing

and Chicago, and Icelandair returned to Halifax with emissions standards for CO2 and for particulate matter. a weekly Boeing 757-F freighter flight between New York, Halifax, Reykjavik and Liege. Safety • The year 2011 also saw three significant foreign car- • In 2011, Canada recorded the lowest total number of riers exit the Canadian market: Virgin America, which accidents (211) for Canadian registered aircraft exclud- terminated its two daily flights between Toronto and ing ultralights since 1976 when the Transportation California (San Francisco and Los Angeles), Astraeus Safety Board of Canada began recording such data which terminated its seasonal flights between Deer (see Addendum Tables S18 to S21). lake and Reykjavik and Lan Chile, which put an end to its five weekly flights to New York and Santiago, Chile (see Addendum Tables A13 and A14)

8 Particulate matter, sulphur oxyde, nitrogen oxyde, volatile organic compounds and carbon monoxyde respectively. 9 These are types of fuel used in aviation. Jet A is found mainly in the United States and has lower freezing and flash points than Jet A-1.

2011Transportation in Canada 33 6 Air Transportation

• Globally, 2011 was a very good year for aviation how air cargo is accepted, handled and transported. safety with 0.37 accidents per million departures by Significant effort has been invested in working with Western-built jets10, down from 0.61 in 2010, accord- partner countries and organizations to create coming to the International Air Transport Association. This mon standards, definitions and procedures that will represents one accident per 2.7 million flights. improve the security of air cargo internationally. • Two Canadian carriers had accidents in 2011: First • Transport Canada pre-published the Canadian Aviation Air in Resolute Bay; and Arctic Sunwest Charters in Security Regulations, 2012 in the Canada Gazette, Part Yellowknife. The first accident, involving a Boeing I, the Government of Canada’s official newspaper— B-737, resulting in the deaths of 12 people while the marking Transport Canada’s first step toward renewing second, involving a DeHavilland DHC-6, resulted in aviation security regulations in response to the chal- the deaths of both of the aircraft’s pilots. lenges and opportunities of the 21st century. This renewal will also make aviation security regulations less • Canada and China signed a technical agreement to burdensome to industry, and more user-friendly. streamline Chinese certification of the Bombardier CSeries airliner. This could help the future CSeries • Transport Canada announced improvements to the sys- and other Canadian-built aircraft better access to this tems for screening passengers and their belongings, market; it is already estimated that over the next 20 including new equipment and lane configurations that years China will import 1,400 aircraft with 100- to 149- improve the flow of passengers and bags through secu- seat capacities, such as the CSeries. rity screening checkpoints at major Canadian airports. • Transport Canada repatriated full responsibility for cer- • Transport Canada made changes to the list of items tification and oversight of business aviation operating passengers cannot bring with them onto aircraft. Small under a Private Operator Passenger Transportation scissors and tools not longer than six centimeters Certificate.11 This was previously delegated to the (excluding the handle) are now permitted in carry-on Canadian Business Aviation Association. baggage. Please turn to Section 6.7 for more details. • The Canada-European Union Bilateral Aviation Safety • The Government of Canada budgeted $21 million Agreement came into force in 2011. Under this agree- over five years to upgrade elements of the Canadian ment, the European Aviation Safety Agency (EASA) Air Transport Security Authority’s checked baggage will recognize certification of Canadian aviation screening equipment that are reaching their end products and services and vice versa, allowing the of life. Under the terms of the 2011 Action Plan on Canadian aviation industry to be more competitive in Perimeter Strategy and Economic Competitiveness, the European market. EASA and Transport Canada as these upgrades are completed, air travellers flying will also work together to enhance civil aviation safety from Canadian sites with U.S. pre-clearance facili- by resolving safety issues. ties will no longer be required to have their baggage re-screened if connecting at a U.S. airport, making • Transport Canada proposed regulations requiring connections through U.S. cities easier and reduc- private and commercial aircraft with six or more pas- ing the risk of bags not being placed on connecting senger seats to install and operate Terrain Awareness flights. While these changes will make Canada–U.S. and Warning Systems (TAWS). These provide aural air travel more convenient, they will also maintain a and visual alerts to flight crews when an aircraft’s path high level of security. is predicted to collide with terrain, water or obstacles. TAWS increase the time available to flight crews to take corrective action. 6.3 2007–11 Recap

Security Economic Framework and • In 2010, the federal government provided long-term Infrastructure funding for the Air Cargo Security Program, aiming to make this element of Canada’s growing trade and In the 2007–2011 period, two new Canadian air car- economic networks more secure. In 2011, the pro- riers set up operations at Billy Bishop Toronto City gram changed from a voluntary/non-mandatory pilot Airport: Porter Airlines and Sky Regional (operating as project to a formal, regulated program that specifies Air Canada Express). Launched in October 2006, Porter

10 That is, jets built in North America, South America, Europe and Japan. 11 Issued under the Canadian Aviation Regulations Section 604.

34 Transportation2011 in Canada Air Transportation 6

Airlines now flies a fleet of 26 Canadian-built Q400s to the Union Station-Pearson Airport Air Rail Link and 13 Canadian and six American cities, and has become Montreal is currently studying building a link between the second most prominent carrier in the busy Montreal– the airport and downtown. Air–Rail links are further Toronto–Ottawa triangle. Of Canada’s major scheduled explained in Section 8.4. Meanwhile, Toronto Island Billy air carriers, Porter Airlines has experienced the most dra- Bishop Airport is planning to augment its ferry service matic growth during this five-year period, while WestJet between Toronto Island and Eiranne Quay at the foot of significantly expanded its international network. Bathurst Street with an 250 metre underwater pedestrian tunnel expected to cost $86.2 million and to be A number of Canadian carriers entered and exited completed in 2014. the market between 2007–2011, with the most notable entry being Sky Regional Airlines and exits including leisure carriers Harmony Airways in 2007, Zoom Airlines in Environment 2008 and Skyservice Airlines12 in 2010. Between 1990 and 2008, GHG emissions from domes- The peak crude oil price of U.S. $147 per barrel in tic aviation rose from 6.4 Mt to 8.5 Mt—an increase of July 2007 presented the industry with record fuel costs. 2.1 Mt CO2e at an average annual growth rate of 1.6% The collapse of petroleum prices worldwide following (34% overall) (see Addendum Figure EN3). While this the global financial crisis that began in 2008 was unfore- increase was caused by a rise in total passenger kilo- seen, leaving a number of commercial air carriers with metres, it was also mitigated by improvements in aircraft higher-priced fuel hedge arrangements for some of their efficiency and the replacement of older and less efficient fuel requirements. To this day, managing fuel-cost fluc- aircrafts. tuations remains an important challenge for air carriers. Transport Canada expects domestic air traffic to grow The recession of 2009–10 produced the worst at an average annual rate of 2.8% until 2020, and inter- economic climate since the Great Depression, with national air traffic to grow at an annual rate of 4.4%. This decreased discretionary spending causing soft demand. in turn will mean higher aviation-related GHG emissions Capital costs rose amid tighter credit conditions, as did for Canada. Domestic GHG emissions are forecasted to fuel prices. Although many in the air carrier industry climb by 31% between 2008 and 2020, from 8.5 Mt to maintained tight control over capacity and controlla- 11.1 Mt (an average of 2.2% per year).13 ble costs during the recession, some carriers (notably Porter and WestJet) continued to grow. Canada has continued to actively participate in the International Civil Aviation Organization Committee on Over the 2007–11 period, Air Canada saw its reve- Aviation Environmental Protection in leadership roles, by nues rise from $10.6 billion to $11.6 billion, while net providing expert technical advice to working groups and income went from a $429 million profit to a $249 million economic and forecasting advice to support groups. loss. At WestJet, revenues rose by nearly half, increas- Canada’s participation contributes to the success- ing from $2.1 billion to $3.1 billion, a situation due ful development of environmental standards and best largely to the carrier’s fleet expansion over the period, practices that will lead to reduced noise and air pollut- going from 70 to 97 aircraft. WestJet’s net profit, how- ant and GHG emissions, both nationally and globally. ever, went from $189 million to $148 million. During the period, fuel cost per litre rose by 29.9% at Air Canada and 27.1% at WestJet while both yield and load fac- Safety tor stayed relatively constant. This increase in fuel price In 2009, Canada celebrated its 100th anniversary of largely explains why the two carriers’ increased gross powered flight. During the 2007–11 period, Canada also revenues did not translate into higher net earnings. experienced significant changes in the approach to avi- Several airports expanded or opened new terminal ation safety since that first powered flight by the Silver buildings between 2007 and 2011, including Quebec Dart in 1909. City (2008), Kuujjuaq (2008), Halifax (2009), Winnipeg Internally, Transport Canada began reorganizing its (2011) and Edmonton (completed in early 2012). aviation safety directorate to more closely relate to Canada’s three largest airports have looked to air- today’s operating environment. Transport Canada also rail links to alleviate some roadside access challenges. introduced modern management concepts, practices Vancouver was first with the Canada Line in 2009. and processes to strengthen internal systems and Toronto–Pearson is expected to follow suit in 2015 with advance aviation safety.

12 A separate company from Skyservice Business Aviation, parent of Sky Regional Airlines. 13 Environment Canada. 2011, Canada’s Emissions Trends.

2011Transportation in Canada 35 6 Air Transportation

Externally, Transport Canada continued overseeing program involves the random selection and screening of the implementation of the Safety Management System airport employees, flight crews, construction personnel (SMS). In 2008, Canada’s largest passenger air car- and other non-passengers (and their belongings) who riers completed implementation of SMS. Since then, enter restricted airport areas. CATSA was also already Transport Canada has conducted SMS assessments of administering the Restricted Area Identity Card (RAIC) all Canada’s airlines to verify that the SMS in these com- at Canada’s 28 major airports16—the first dual biometric panies is effective and contributes to a healthier safety (iris and fingerprint) airport access identification system culture within the organization. for non-passengers to be used anywhere in the world. Overall, the combined programs represent a significant Today, SMS policies, processes, procedures and improvement to Canada’s aviation security system. systems cover more than 90% of revenue passenger kilometres. In June 2007, Transport Canada introduced a program to prevent people who may create an immediate secu- Other notable highlights during this period include: rity threat from boarding commercial flights. Called the • In June 2007, Transport Canada introduced regula- Passenger Protect Program, it works by maintaining a tions14 requiring Canadian commercial aeroplanes Specified Persons List that the Government of Canada to be equipped with an Airborne Collision Avoidance provides to air carriers. Air carriers must screen all pas- System (ACAS). ACAS reduces the risk of mid-air col- sengers for flights to, from or within Canada against lisions by identifying the presence of a nearby aircraft the persons on this list. If a person is on the list and and providing a visual notification and an audio warn- Transport Canada suspects that they may pose a threat, ing to avoid a loss of separation. the department can disrupt their ability to cause harm or threaten aviation by taking action, such as preventing • At the European Union–Canada Summit held in them from boarding an aircraft. Prague, Czech Republic in May 2009, Prime Minister Stephen Harper and European Commission President In response to new terrorist tactics, Transport Canada José Manuel Barroso signed the Canada–European introduced millimetre-wave full-body screening technol- Union Agreement on Civil Aviation Safety. The agree- ogy at major Canadian airports in 2010. By the end of ment came into force on July 26, 2011. 2011, 53 such scanners had been deployed at 23 airports. Transport Canada is also exploring the benefits • In the fall of 2010, officials from approximately 190 of advanced auto-detection software for this equip- member countries attended the ICAO 37th General ment, and will consider deployment of the software at Assembly in Montreal. Canada was re-elected to Canadian airports. the Council, ICAO’s executive body. At the assembly, Canada confirmed its commitment to increasing Between 2006 and 2009, Transport Canada designed aviation safety. ICAO also supported the concept of a and tested various elements of an improved Air Cargo State Safety Program, an initiative already in develop- Security Program with the goal of improving air cargo ment in Canada. security—an important part of Canada’s trade and economic networks. The aim is to achieve air cargo security • In November 2010, an amendment to the Canadian compatibility with the highest standards in the world. In Aviation Regulations15 limiting the departure speed of support of the initiative. aircraft to a maximum of 250 knots came into effect. Lower-speed take-offs reduce the risk of mid-air collisions, particularly with birds, which can result in 6.4 Economic Framework aircraft damage and injuries to passengers and crew. and Infrastructure Security Canadian commercial air carriers In January 2007, the Canadian Air Transport Security Authority (CATSA) implemented its mandated program Canada is home to a wide variety of air carriers, includ- for screening airport workers and non-passengers. The ing the following:

14 See http://www.gazette.gc.ca/archives/p2/2007/2007-06-27/html/sor-dors133-eng.html 15 See http://www.gazette.gc.ca/rp-pr/p2/2010/2010-11-10/html/sor-dors219-eng.html 16 Made up of the 26 NAS airports and two non-NASl.

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Air Canada, Canada’s largest airline and the world’s Porter Airlines, a regional airline headquartered in 15th-largest passenger airline (in terms of passenger Toronto operating regularly scheduled flights between volume) as of 2010. Air Canada, with a workforce of Toronto and 1919 Canadian and American locations. 23,700 employees in 2011, transports passengers Porter flies 26 Canadian-built Bombardier Dash-8 and cargo to 181 destinations worldwide on both Q400 turboprop aircraft. scheduled and chartered flights. Air Canada has a mainline fleet of 205 aircraft, augmented by 157 air- Canada is also home to some air cargo carriers, such as: craft flying under the Air Canada Express banner. A Kelowna Flightcraft Air Charter, which operates founding member of the Star Alliance (see Addendum Canada’s largest cargo airline, and has long-term Map 10)—the largest airline alliance in the world, operating leases with both Purolator Courier and started in 1997—Air Canada also has a freight car- Canada Post. Kelowna Flightcraft operates 23 air- rying division, Air Canada Cargo. Air Canada’s craft, including 18 under the Purolator banner. network is enhanced by five regional airlines—Jazz Air, Air Georgian, Exploits Valley Air Services Ltd., Sky Cargojet, which is Canada’s second-largest all-cargo Regional Airlines and Central Mountain Air—primarily airline. Cargojet operates an overnight network of operating feeder flights (i.e. connecting smaller cities 13 freighter aircraft flying to 12 destinations coast with Air Canada’s domestic hub airports) under the to coast, as well as from Newark, New Jersey to Air Canada Express brand, code-sharing agreements Bermuda and Hamilton, Ontario to Katowice, Poland. with more than 20 airlines and Air Canada Vacations, Cargojet transports small parcels for large integra- a tour operator subsidiary offering a full collection of tors such as UPS, as well as heavy and containerized leisure travel packages. freight. It employs about 400 people. WestJet Airlines Ltd. provides scheduled and charter Many other Canadian airlines also offer passenger air service to 76 destinations in Canada, the United States, and/or cargo services. These include, among others, Mexico and the Caribbean. Canada’s second-largest car- Sunwing, CanJet, First Air, Canadian North, Air North, Air rier, WestJet also has code-share agreements with Creebec, Air Inuit, Bearskin Airlines, Perimeter Airlines, five foreign carriers17 and interline agreements with Air Express Ontario, Air Labrador, Provincial Airlines, 15 foreign carriers. WestJet employs 7,141 people, Air Saguenay, Flair Airlines, Kenn Borek Air and Propair. or “WestJetters” and finished 2011 with a fleet of The industry as a whole faced many challenges in the 97 aircraft, all Boeing B-737. wake of nearly frozen commercial credit markets follow- Jazz Aviation LP, a former subsidiary of Air Canada, ing the global financial crisis that began in the fall of now controlled by the holding company Chorus 2008. This provoked a liquidity crisis at Air Canada in Aviation. Jazz Aviation’s activities as a regional feeder particular. Air Canada has since undertaken to financially for Air Canada make up its core operations. Operating and operationally restructure, focusing on key objec- 133 aircraft under the Air Canada Express banner, tives including tight supply management, attracting with 15 more on order, Jazz services 53 Canadian and higher-yielding premium-paying traffic, and containing 28 U.S. destinations; it serves more Canadian points its controllable costs through a Cost Transformation than any other airline. Jazz began diversifying in 2010 Program, which in 2011 generated operational savings by operating six Thomas Cook Airlines-owned Boeing and revenue gains in excess of its $530 million year-end 757s under the Sunquest banner; this activity was target by the end of the third quarter of 2011. terminated in April 2012. Jazz finished 2011 with WestJet remains one of the few consistently profitable 4,777 employees. air carriers in North America. The company embarked Air Transat, a business unit of integrated international on its next stage of growth by migrating its internal tour operator Transat A.T. Inc. Air Transat is a holiday computer reservation system (CRS) to a Sabre plat- travel airline that carries millions of passengers each form in 2008. The new system has allowed WestJet to year to destinations around the world, with a fleet of 23 merchandise its services and expand its network by Airbus wide-body jets18, supplemented by additional aligning with other air carriers, including Cathay Pacific, service supplied by CanJet’s fleet of Boeing B-737. American Airlines, Air France-KLM, Korean Airlines, EL

17 American Airlines, Cathay Pacific, Delta, Japan Airlines and Air France-KLM. 18 A mix of Airbus A-310, A-330-200 and A-330-300. 19 As of March 2012.

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AL Israel Airlines, Emirates and Air India. 2011 also saw Blue Sky Policy and air transport WestJet successfully bid for 16 landing/takeoff slots at LaGuardia Airport in New York City, potentially increas- services agreements ing its appeal to business traffic between Canada and On November 27, 2006, the Government of Canada the United States. WestJet plans to use these slots to introduced the Blue Sky Policy, a new international air launch a new Toronto-LaGuardia service in June 2012. transportation policy to help further connect Canadians Canada’s northern-based air carriers continued to to the world. The policy calls for a proactive approach evolve and serve the unique needs and operating con- to negotiating expanded air transport agreements, rec- ditions of Canada’s North. These carriers serve a widely ognizes the unique characteristics of Canada’s aviation dispersed market of approximately 110,000 people market, and provides guidance on dealing with situa- from networks built around four hubs situated at Iqaluit, tions where: Rankin Inlet, Yellowknife and Whitehorse. With relatively • country-specific discriminatory airport access and/or little in terms of surface infrastructure, Canada’s North facilitation issues seriously limit the ability of Canadian is highly reliant on air transportation for the supply and airlines to operate services to another country; movement of cargo (e.g. food, fuel) as well as passenger services (including emergency medical evacuations). The • the business environment presents major obsta- region is, however, rich in natural resources, which has cles—such as fund transfers and provisions on been driving increased economic activity. Both WestJet double taxation—to Canadian airlines’ commercial and Air Canada started new services to Yellowknife and operations; Whitehorse. Air Canada also began offering services to Iqaluit from Ottawa and Montreal in March 2010, but • foreign carriers appear to be contravening rational withdrew from that market in July 2011. business principles or are protected from normal market conditions, resulting in a markedly unbalanced In the coming years, high fuel costs will continue to playing field; or challenge the air industry, as will intense competition, while margins will continue to be thin in many mar- • foreign carriers would be reasonably expected to offer kets. Some airlines—notably Air Canada—also face a level of service that would significantly reduce or the challenge of negotiating new labour agreements. effectively eliminate competition in some markets/ Environmental considerations—for example, emissions routes, resulting in a net loss for Canada. trading and noise—will increasingly factor into airlines’ When one or more of these situations arise, a more operational decisions as they seek ways to mitigate gradual approach to expanding the bilateral air trans- their environmental footprint. port agreement is advocated. As a result of a decision by the Canadian Transportation Since the launch of the Blue Sky policy, the Agency, beginning in January 2009, Air Canada, Jazz and Government of Canada has negotiated air transport WestJet, which provide the majority of domestic air service agreements covering almost 60 countries, in addition in Canada, offer a second seat free of charge to passengers to the Open Sky agreement already in place with the with disabilities travelling in Canada who require an United States, including: attendant or additional seating for themselves due to their disabilities. • Open Skies-type agreements with 12 countries: Ireland, Iceland, New Zealand, Barbados, the Twelve air carriers have adopted a Multiple Format Dominican Republic, Costa Rica, South Korea, policy for persons with disabilities, and will provide Jamaica, Switzerland, Trinidad & Tobago, El Salvador, information on services in alternate formats, such as and Brazil; electronic, audio, large print, and Braille upon request.

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• Expanded agreements with nine countries: Mexico, So far, only one MNJV has been approved by Japan, Jordan, Singapore, the Philippines, Morocco, Canadian competition authorities: the Atlantic ++ Joint Egypt, Cuba and Algeria; and Venture on transatlantic routes involving Air Canada, Lufthansa, and United-Continental. This MNJV was • New ‘first-time’ agreements with nine countries: granted antitrust immunity by the U.S. Department of Kuwait, Serbia, Croatia, Panama, Turkey, South Africa, Transportation in 2009. In 2011, Canada’s Competition Ethiopia, Qatar and Tunisia. Bureau challenged a proposed second MNJV focused A comprehensive air transport agreement between on transborder flights and composed of Air Canada and Canada and the European Union’s 27 member states United/Continental. The Bureau has referred the issue was also signed in 2009. This includes countries to the Competition Tribunal. with which Canada did not previously have air transport agreements—Cyprus, Estonia, Latvia, Lithuania, Airports Luxembourg, Malta, Slovakia, and Slovenia. Including the Open Skies agreement Canada signed with the The effectiveness of Canada’s airport and air-navigation United States, Canada has also negotiated open agree- sector is recognized domestically and internationally, ments—accelerated under the Blue Sky Policy—with 40 with highlights from the past few years including: countries20 that represent more than 72% of Canada’s international air passenger traffic and 90% of Canada’s • the Greater Toronto Airport Authority (GTAA) winning overall air merchandise trade. an International Air Transportation Association (IATA) Eagle award in 2010 for outstanding performance in customer satisfaction, cost efficiency and continuous Current trends in global alliances improvement; Airline industry consolidation continued during the period • NAV CANADA winning the IATA Eagle award in 2010 covered by this report as legacy carriers struggled with and 2011 for best air navigation service provider in the economic downturn, increased domestic competition the world; and fluctuating fuel prices. In the United States, the industry witnessed the mergers of U.S. Airways and America • the Vancouver International Airport winning the Eagle West, Delta and Northwest, United and Continental; in award in 2007 for outstanding performance in cus- Europe, the mergers of Air France and KLM; and British tomer satisfaction, cost efficiency and continuous Airways and Iberia; while in Latin America, two compet- improvement; ing groups, LAN and TACA, have established a network of • Ottawa MacDonald–Cartier International airport being national carriers. The global economic shift toward Asia ranked number one in North America and number two and the emergence of mega-carriers in Latin America in the world in 2011 among airports serving two to five and the Middle East may accelerate consolidation in the million passengers by the Airports Council International coming years, increasing the levels and forms of airline (ACI) Airport Service Quality (ASQ) Awards; and collaboration aimed at improving operational efficiencies and reducing cost structures. • Since 2002, Halifax Stanfield International Airport has won 16 first prizes in various categories at the ACI The emergence of Metal Neutral Joint Ventures (MNJVs) ASQ Awards, in addition to finishing second or third as a form of cooperation is the latest attempt by legacy eight other times. carriers to settle into the new competitive landscape. MNJVs involve full coordination of major airline functions Airport authorities across the country have spent bil- (e.g. revenue management and marketing/sales), and lions on capital programs to improve and expand their allow airline partners to share information about pricing, airports (see Addendum Table A2). For example: capacity and frequency. Examples of approved MNJVs • in 2007, Vancouver International Airport completed a include Lufthansa-All Nippon Airways (ANA), United/ $1.4-billion capital program that included a four-gate Continental-ANA, American-Japan Airlines (JAL), Delta- expansion to the International terminal; Virgin Australia, American-Qantas, and the most recent STAR Alliance MNJV (Lufthansa-United-Continental-Air Canada) in the transatlantic market, known as Atlantic++.

20 The 12 previously listed, the 27 EU countries and the United States.

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• the Greater Toronto Airports Authority completed its high-contrast floor markings for passengers with visual airport development program in 2007 and the expan- impairments; dedicated video monitors for passengers sion of Terminal 3 in 2010; airport development over with hearing impairment; and lift-equipped shuttle bus the last 15 years has resulted in more than $5 billion service from parking lots. The Ottawa International spent; and Airport won the City of Ottawa Accessibility by Design award, and the Edmonton International Airport received • Calgary International Airport is in the midst of a several awards for accessibility, including the inaugu- $2-billion airport development program expected to ral Percy Wickman Accessibility Award in recognition of be completed by 2015, which will include a new run- its commitment to making the airport one of the most way (to be opened in 2014) and a new international accessible in Canada. terminal (to be opened in 2015) (see textbox below).

Funding of the Air Transport System

New Runway at Calgary Airport There are a number of different economic models Construction of a fourth runway at Calgary International Airport around the world that determine who will pay for the air began in April 2011 and is expected to be completed by May 2014. transportation system. The degree to which users, or The new 4,267-m (14,000-ft) runway—the longest in Canada—will the general taxpayer shoulder the burden of paying for be able to safely accommodate the largest aircraft flying today. Built the air transport system varies from country to country. on a north-south axis, it will be located 2,170 m east of the exist- Some countries have a system that is far more based ing runway 16-34 (currently the longest at the airport), and will run on the ‘user-pay’ principle for all or almost all aspects parallel to it. Parallel runways with such spacing between them drastically increase an airport’s capacity by allowing simultane- of the system, others provide substantial funding from ous operations on each runway—reducing delays that the airport general government revenues. authority estimates would exceed an average of 10 minutes by 2013. The airport authority expects the airport’s runway system capacity Canada’s air transportation system is based on the to increase from 250,000 movements per year to 350,000 once the ‘user pay’ principle, minimizing the burden to taxpay- project is completed. This $620-million project is financed entirely ers. Canadian airlines, air navigation services and most by the Calgary Airport Authority and is part of a $2.05-billion proj- National Airport System (NAS) airports are operated ect that will also see the construction of a new 22-gate international by private entities—independent of government—that terminal building. Funding from these projects come from the air- must recoup their costs to remain viable. This is done port improvement fee charged by the airport. most often through various fees (see Addendum Table A5 for airport improvement fees at NAS airports) and surcharges charged to the user. All airline tickets con- Canada’s large airports (see Addendum Map 5) are tain a number of additional surcharges, fees and taxes not the only ones enjoying success: airports in Gander, beyond base airfare. Canadian federal government Deer Lake and Fort McMurray all enjoyed strong growth charges are the Goods and Services/Harmonized Sales in 2011, as their passenger traffic grew by 18.9%, 8.6% Taxes, and the Air Travellers Security Charge. In addi- and 6.9% respectively. tion, some taxes or charges do not appear on an airline ticket but are rather incorporated into the base fare. This National Airport System airports offer such features includes the federal fuel excise tax (which applies only as accessible parking, accessible washrooms, relieving to domestic flights) and airport rent at larger, federally areas for service animals, TTY phones for persons with owned airports. Together these represent a small share hearing impairment, and accessible local transportation of overall ticket prices, which fluctuate depending on from the airport. These air terminal operators have also the route and fare basis. adopted a Multiple Format policy. Several airports have won accessibility awards for Cross Border Leakage their inclusive design. The Vancouver International Airport won the Rick Hansen Accessibility Award, and One issue that has been raised by stakeholders is the provides such features as elevators with voice “floor fact that many Canadians travel across the border by callers”, tactile maps of the terminal buildings, and car to fly out of U.S. airports located in close proximity to Canada. The primary reason cited for this is the

40 Transportation2011 in Canada Air Transportation 6 disparity in total airfares between the two countries. In as China. Canada’s small airports and flight schools addition to base fares (before the addition of charges, provide an array of flight training programs for foreign fees, and taxes) which are often substantially lower in pilots, with the Flight Training segment of GA (639 air- the U.S., the number and amount of charges, fees and craft) flying an average of 328 hours per aircraft—a total taxes are often higher for flights originating in Canada. of 5.3% of GA activity. This reflects not only the greater use of the user-pay system in Canada, but also the charges levied by the U.S. Close to 1,900 aerodromes across Canada host GA 22 on flights coming into that country, which are not levied operations. While most do not host regularly sched- on flights originating in the U.S. The precise number of uled air services, these smaller aerodromes connect Canadian passengers flying from U.S. airports is difficult the communities they serve to the rest of the country. to ascertain, although anecdotal evidence suggests it is They facilitate GA and other activities, such as operat- in the millions. There is also anecdotal evidence to sug- ing as bases for aircraft designed to fight forest fires or gest U.S. passengers drive across the border to fly out infestations (such as the pine-beetle), medical evacua- of Canadian airports, although in this case it appears tion (i.e. ‘medivac’), disaster evacuation and recovery, or the reason is choice of destinations rather than cost. aerial mapping and cartage for natural resource devel- Again the precise numbers are difficult to determine. opment. However, access to aerodromes and airports remains a persistent GA issue. Some small aerodromes face financial viability and noise issues, or pressure to General aviation (GA) redevelop their land with more lucrative real estate projects. Meanwhile, some larger airports with limited space 21 Of the close to 35,000 aircraft registered in Canada, and capacity would prefer to focus on commercial air some 85% are operated for GA purposes. services rather than general aviation. These pressures Canada’s GA component has a fleet of over 29,000 are already impacting GA, forcing it to relocate some of aircraft out of a total of 34,947 Canadian-registered air- its activities. craft. GA aircraft flew a total of more than 1.7 million hours in 2010. The Private Owners segment represents a third of the GA fleet and reported in 2010 an average 6.5 Environment of 42 hours of flight time per aircraft. The most active GA segment is Air Taxi Operators, whose 2,752 aircraft Air pollution and emission mitigation reported flying an average of 131 hours each in 2010. About 50% of balloon operations—which also fall under the banner of GA—are used to generate revenue, while Airports and noise the remainder are dedicated to private recreation. Also Aircraft noise pollution is produced by any aircraft or in this component, ultra-light aircraft are used principally its components, during various phases of flight: on the for recreational purposes (8–12%); amateur-built aircraft ground while parked such as from auxiliary power units, are almost exclusively recreational, with less than 6% while taxiing, during take-off, over-flying while en route, devoted to commercial use. or during landing. Areas most affected are those in the The fractionally owned partnerships (FOP) segment of immediate vicinity of airports, underneath and lateral to Canadian GA is similar in concept to the time-sharing departure and arrival paths. There is often a trade-off of aircraft. Owners are primarily concentrated in a small that takes place between air emission and noise, where number of markets (i.e. Toronto, Calgary, Montreal and improvements in fuel consumption can lead to increase Vancouver). In 2008, FOPs involved 32 aircraft, each in noise and vice-versa. logging 459 hours of average annual use—a very small Airports are heavily involved in community relations proportion of total GA activity. This contrasts with U.S. programs and stakeholder consultation mechanisms FOP operators who have an average fleet of 190 air- related to noise. craft, with each aircraft flying 800 to 1,000 hours a year. Transport Canada implements regulations that adopt Flight training also falls under GA activity, and has the latest international aircraft noise emission standards, become an important Canadian export to countries such

21 See Table A9 in the Addendum. 22 Please see Table A1 in the Addendum for a breakdown by aerodrome type.

2011Transportation in Canada 41 6 Air Transportation and supports individual airport noise-management Trend of domestic aviation programs by enacting enforceable noise-abatement procedures and restrictions that address local concerns. GHG emissions Aviation accounts for a little more than 5% of all Air transport and pollutants transportation-related SOx and NOx emissions, but contributes about 2% or less to the transportation-related Air pollutant emissions from aircraft engines include emissions of other air pollutants (see Figure EN4). NOx (nitrous oxide), CO (carbon monoxide), SOx (sulfur oxide), volatile organic compounds (VOCs), and partic- Emissions in general increased between 1990 and ulate matter. These emissions occur during all phases 2009, with SOx by 1,756 tonnes; NOx by 23,898 tonnes; of flight and affect local air quality (see Addendum and VOCs by approximately 3,358 tonnes. PM 2.5 and Figure EN6). CO decreased by 96 tonnes and by approximately 6,745 tonnes, respectively (See Figure EN8). Greenhouse gas emissions (GHGs)

The most significant greenhouse gas emitted by avia- Reducing aviation emissions tion is carbon dioxide, a product of fuel burn. International emissions

The aviation sector contributes 2% of global GHG Jurisdiction of environment emissions.23 Given the international nature of aviation, and air transportation Transport Canada participates at ICAO to develop Aviation is an internationally integrated but nationally regulated global policy positions on aviation emissions. industry—integrated when it comes to international air operations but still operating within the confines of a regulatory framework At the ICAO’s General Assembly in 2010, member that governs the degree of integration. The industry operates within states adopted a resolution on aviation and climate a framework of rules and standards set by the International Civil change.24 It set several voluntary goals for international Aviation Organization (ICAO), including those established by its aviation emissions, including: environmental committee, the Committee on Aviation Environmental Protection (CAEP). Transport Canada represents the Government of • a global annual average fuel efficiency improvement Canada at ICAO and CAEP, and has exercised its mandate for managing both domestic and international aviation emissions. of 2% until 2020; The Aeronautics Act, administered by Transport Canada, provides • a medium-term aspirational goal of keeping global broad regulation-making authority over airlines, airports, airspace net carbon emissions from international aviation from and aircraft through certification and regulation. The certification 2020 at the same level; and process is regulated by the Canadian Aviation Regulations made pursuant to the Aeronautics Act, and is applicable to aircraft both • a global aspirational goal of 2% annual fuel efficiency manufactured and registered in Canada. Under the 1944 Chicago improvement from 2021 to 2050. Convention, the same rules—including those related to environmental protection—must be applicable to both the domestic and To help ICAO track progress towards reaching these international aspects of aviation. goals, the resolution encourages member states to submit action plans detailing specific measures to address GHG emissions related to international aviation to ICAO by June 2012. Canada supports the resolution’s stated goals, and intends to submit an action plan explain- ing how the Canadian aviation industry will reduce GHG emissions.

23 Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. 2007. http://www.ipcc.ch/publications_and_data/ar4/wg1/en/contents.html 24 Resolution A37-19: Consolidated statement of continuing ICAO policies and practices related to environmental protection – Climate change. http://legacy.icao.int/env/A37_Res19_en.pdf 16 Made up of the 26 NAS airports and two non-NASl

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about 5.4 million metric tonnes of CO emissions—with Canadian aviation industry’s 2 additional reductions of more than three billion litres of voluntary agreement and action plan jet fuel from these measures expected by 2016 (representing about eight megatonnes of CO emissions over Despite high and increasing demand for airline ser- 2 this 20-year period).26 vices in Canada, significant progress has been made to mitigate the sector’s carbon footprint through voluntary measures undertaken by industry, the Government of Measuring airport emissions Canada and NAV CANADA. Since the early 1970s when concerns were first raised In June 2005, Canadian air carriers and Transport regarding airport source impacts on ambient air quality, Canada signed the world’s first voluntary agreement Transport Canada has supported air quality assessments to address GHG emissions from both domestic and at airports. More recently, domestic and international international aviation operations. This agreement estab- concerns surrounding GHG emissions and their effect lished Canada (ATAC) and the National Airlines Council on climate change have led the Canadian aviation of Canada (NACC) report annually on the amount of fuel industry to actively employ and conduct research into burned and activity measures such as available-seat a variety of GHG reduction strategies including airspace kilometres.25 optimization, new aircraft design, new low-carbon aviation fuels, and operation and market-based measures. As of 2009, Canada’s aviation industry’s fuel efficiency Such strategies are often multi-purpose—for example, had improved by 1.9% annually since 1990—a 30% a given strategy may reduce GHG emissions while also cumulative improvement—surpassing the agreed-upon providing cost and operational efficiencies. goal in the voluntary agreement. Though in absolute terms domestic and international emissions have grown at an Working in partnership with the Canadian Airports annual average rate of 1.4% between 1990 and 2009 (see Council (CAC), Transport Canada developed a meth- Figure EN7), this increase would have been significantly odology and tool for conducting GHG emissions higher without these fuel efficiency improvements. inventories at Canadian airports. Inventories have been completed for 26 NAS airports and the airports owned In March 2010, Transport Canada and aviation and operated by Transport Canada. The airports have stakeholders from the aerospace industry—air car- established baseline inventories that indicate opera- riers, airports, the air navigation service provider, and tional opportunities to reduce airport related emissions. the business aviation sector—formed a Working Group This tool is currently being updated for use globally in on Aviation Emissions. The Working Group provides a cooperation with Airport Council International (ACI), and collaborative forum for information sharing and discus- will be available in the spring of 2012. sion, and is developing an action plan to reduce GHG emissions from the Canadian aviation sector between Transport Canada continues to work cooperatively now and 2020. The action plan will form the basis of the with the U.S. Federal Aviation Administration (FAA) and Canadian government’s response to the ICAO resolu- the U.S. National Aeronautics and Space Administration tion of 2010. (NASA) as a funding sponsor for PARTNER: the Partnership for Air Transportation Noise and Emissions NAV CANADA also supports pollution-prevention Reduction. PARTNER is a long-term partnership of aca- programs, focusing on performance-based navigation, demia, industry and government established to create en-route surveillance and communication, airspace uti- a world-class consortium closely aligned with national lization and airport operations. NAV CANADA estimates and international needs to foster breakthrough tech- that, between 1997 and 2009, newly deployed navigation nological, operational, policy and workforce advances technologies and procedures have helped air operators for the betterment of mobility, the economy and save more than two billion litres of jet fuel—representing the environment.

25 A measurement of passenger-carrying capacity calculated by obtaining the product of the number of seats available and the distance over which they are available. 26 NAV CANADA. 2011. NAV CANADA and the Environment. http://www.navcanada.ca/NavCanada.asp?Language=en&Content=ContentDefinitionFiles%5CAboutUs%5CEnvironment%5CDefault.xml

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Reducing emissions through Alternative fuels regulation and best practice guidance The potential use of alternative fuels is being examined as an important part of the global strategy to reduce Transport Canada is the lead federal regulatory depart- aviation emissions of CO . Air quality benefits will also ment for aviation emissions. Because of the global nature 2 be realized, as feedstocks for sustainable biofuels do of the industry, the department’s regulatory framework not contain sulphur; the use of biofuels will therefore aligns with international standards and recommended result in the reduction of SO emissions and substan- practices developed and adopted by the ICAO.27 x tial reductions in particulate matter emissions. Canadian ICAO emissions standards are published in Annex 16 researchers and stakeholders are conducting biofuel to the Convention on International Civil Aviation, Volume I research to assess the viability of alternative aviation Aircraft Noise and Volume II Aircraft Engine Emissions. fuels, and to evaluate the potential effects on engine ICAO developed these standards through its Committee operations. on Aviation Environmental Protection (CAEP), a com- In 2011 the Canadian General Standards Board mittee where Transport Canada actively participates on (CGSB) amended Canadian aviation fuel standards for technical working groups to develop environmental stan- Jet A and Jet A-1 to allow up to a 50% blend of syn- dards according to the underlying principles of technical thetic source material in jet fuel. feasibility, economic reasonableness and environmental benefit, while also taking into account the environmental interrelationships. Current ICAO emission standards Land pollution and remediation limit noise from aircraft and emissions of NOx, unburned hydrocarbons, carbon monoxide and soot from aircraft The impact of air transportation on the environment goes beyond air quality and emissions issues. Federal engines. The latest ICAO standard for NOx emissions for new aircraft engines will take effect in 2013. contaminated sites are a legacy of past practices, the environmental consequences of which were not fully

CAEP’s current priority is the development of a CO2 understood at the time. The Government of Canada has standard for fixed-wing aircraft, which is targeted for responded through the establishment of the Federal 2014. CAEP is also developing a certification require- Contaminated Sites Action Plan (FCSAP) Program in ment in support of a non-volatile particulate matter 2005. FCSAP is a cost-shared program that helps fed- standard applicable to aircraft engines, to be ready for eral custodians to address eligible contaminated sites 2016; a standard for volatile particulate matter will sub- for which they are responsible. Transport Canada is a sequently be developed. Transport Canada is providing participant of this program and support’s the program’s expert technical advice as well as forecasting and eco- objectives of reducing risks to human health and the nomic analysis support to the task groups developing environment and associated financial liability result- these new standards. Once completed and adopted by ing from federal contaminated sites. Looking to the air ICAO, Canada will also adopt the new particulate matter transportation sector, the department’s remediation of and CO2 standards. the Fort Nelson airport is an example of how historical With respect to noise, CAEP continues to improve contamination can be successfully remediated. certification methods for cost-effective ways of limiting exposure to noise that may be experienced in the communities surrounding airports. In collaboration with key aviation stakeholders, including international bodies such as ICAO, Transport Canada is undertaking research and development (R&D) in an effort to reduce aviation emissions. Current R&D activities include: standard development for aviation particulate matter emissions; GHG climate modeling to assess aviation impacts in Arctic atmospheric regions; and assessment of cleaner alternative aviation fuels.

27 Canada has adopted these ICAO standards for aircraft and engine emissions and references them in its Airworthiness Manual Chapter 516, made pursuant to the Canadian Aviation Regulations and under the Aeronautics Act.

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Examples of glycol management/de-icing operations Fort Nelson Airport : environmental remediation • Toronto-Pearson airport allows frost de-icing on-gate As part of the transfer agreement of the Fort Nelson Airport to the with specific control and cleanup procedures. For local municipality, Transport Canada agreed to address the multiple snow and ice de-icing, the airport developed an infield 3 contaminated sites at the airport totaling an estimated 165,000 m centralized pad, the largest in Canada, capable of of contaminated soil—enough to cover more than 25 football fields de-icing up to 12 aircraft simultaneously. This pad is with soil one metre deep. A 1997 Environmental Baseline Study identified 56 areas of concern. Remediation work began in 1999 and underlain by a plastic membrane to ensure contami- was scheduled to be completed in 2015. The project was accelerated nation is not released to the environment. between 2009 and 2011 as part of Canada’s Economic Action Plan. During that period, 52,000 m3 of contaminated soil was placed in • Vancouver switched to a single contractor for all an on-site soil treatment facility and an additional 22,200 m3 of soil aircraft de-icing in 2009, which enabled a centralized was remediated to below commercial industrial levels and is now management of all aircraft de-icing and improved data available for re-use as backfill. Over 60% of the airport land is now tracking. New de-icing equipment is fitted with high remediated and work continues on the remaining areas. efficiency nozzles that allow removal of snow or frost with lower volumes of fluid; glycol blending has been implemented to reduce the concentration of chemical used and therefore reduce overall chemical use by at Water Pollution from Glycol least 30%; in 2010–11, a trial of forced air equipment to pre-treat aircraft showed a 50% reduction in de- There are two types of glycol used in aircraft de-icing: icing chemical used and de-icing bay time. • Ethylene glycol, an organic compound widely used • Aéroports de Montréal (ADM) initially invested nearly as automotive antifreeze and a precursor to polymers. $40 million in the construction of a centralized de- In its pure form, it is an odorless, colorless, syrupy, icing centre at Montréal–Trudeau airport that allows sweet-tasting liquid. used de-icing fluids to be recovered via a system of underground pipes. This system protects nearby • Propylene glycol is also an organic compound, which streams from these fluids. An additional investment is colorless, nearly odorless, clear, viscous liquid with will be made in 2012 to increase by nearly 50% the a faintly sweet taste, hygroscopic and miscible with capacity of the de-icing centre. In addition, de-icing water, acetone, and chloroform. trucks are equipped with state-of-the-art technology, Aircraft de-icing and anti-icing fluids are a glycol including sensors, to achieve more targeted delivery based temperature depressant. Both ethylene and pro- of glycol and increase its effectiveness. This reduces pylene glycols are used, however, ethylene dominates the quantity of glycol used while ensuring compliance as it is a lower freezing point depressant. De-icing fluid with the most stringent safety standards. is sprayed hot to aid in the removal of contaminants • In St. John’s in 2007, a centralized de-icing facility and (frost, snow and or ice) off the wings and fuselage of pad was constructed; all glycol was processed on site an aircraft. Anti-icing fluid is sprayed cold and pre- and residual shipped out of process for recycling. In vents snow and ice from remaining on the aircraft as it 2011 an on site 3.8 million litres glycol effluent storage takes off. Transport Canada regulations prohibit aircraft tank was constructed; and in 2012, a feasibility study departures with contaminated wings. was completed to construct an engineered wetland to In the mid-1990’s, Transport Canada and Fisheries process spent glycol; and Oceans Canada developed a 100mg/l glycol end • Ottawa has a bio-treatment system that collects all of pipe guideline for the release of glycol into a receiv- surface water in the vicinity of the central de-icing ing stream. All Canadian airports have developed facility. Bacteria treat the glycol underground and operational procedures and built the appropriate con- degrade the glycol to acetate (i.e. vinegar) and the trol structures to control the release of glycol into the vinegar is then degraded naturally. receiving streams to meet this guideline. During snow- falls, or precipitation of any kind, the airport’s deicing • Winnipeg constructed a central de-icing facility (CDF) pads are used exclusively. Glycol is contained and col- in 2005 capable of retaining and storing 11 million lected from the de-icing pads and is directed to storage litres of glycol. In 2012, the airport will construct addi- lagoons located on the airport grounds. tional supporting infrastructure, including a second cell adjacent to the glycol retention pond and an additional force main to transfer fluid between the 2 cells and ultimately to the sewer for disposal.

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• Finally, Kelowna is considering a glycol blending Airline operations facility, which will reduce the glycol consumption considerably. The airport authority is in the initial stages of their evaluation, but hopes to have it ready for implementation for the 2012–13 de-icing season. Number of Airline Operators (CAR 705) Certificate holders: 39

6.6 Safety Airline transportation remains one of the safest means of travel for Canadians. During the last five Overview years, Canadian-registered airlines operating under the Canadian Aviation Regulations (CARs) have aver- Canada has one of the safest air transportation sys- aged 3.6 accidents a year for an accident rate of tems in the world. During the last decade, the rate of 0.11 per 100,000 airline movements. Despite these air transportation accidents has considerably declined trends, another trend, the rise in airline traffic, continues from nearly eight accidents per 100,000 hours flown to spur numerous efforts to make this mode of transport in 2000 to fewer than six in 2011—a drop of 25%. even safer. The total number of yearly accidents has also declined: the numbers reported in the last four years—211, 234, In November 2010, Transport Canada published 231 and 234—are the lowest recorded figures in 15 regulations28 prohibiting high-speed aircraft departures years (see Tables S18 and S19). In fact, that’s more than in Canada. Lower-speed take-offs reduce the risk of 40 fewer accidents a year when compared to the pre- mid-air collisions—particularly with birds—which can vious 10-year average, an indicator of Canada’s solid result in aircraft damage and injuries to passengers and aviation safety record. flight-crew members. Minimizing the risk of bird strikes can also reduce flight delays, cancellations and aircraft Several key factors during the last few years have downtime. This is one in a series of smaller, incremental shaped the state of aviation safety today. measures adopted during the last five years to improve Foremost, Transport Canada has taken increasing airline safety. steps to harmonize Canadian and international aviation SMS, on the other hand, was neither a small nor an safety policies, programs and standards, including in incremental change. In fact, it is likely the largest shift such areas as pilot licences, aircraft safety equipment in safety ethos in decades. SMS involves strengthening and language proficiencies for communications with the safety culture within an airline by requiring that air- ground crews. In 2010–2011, Transport Canada par- line to design safe policies, processes and procedures ticipated in bilateral meetings with China, Korea, Israel, to identify, assess and address safety risks. SMS orga- Brazil, Mexico, Singapore, Norway, Iceland, Switzerland, nizations have processes in place to monitor, investigate Trinidad & Tobago, the EU and the United States to dis- and learn from every safety-related incident or issue. cuss various aviation safety issues. Today, Canada’s largest passenger air carriers operate Transport Canada also works through the ICAO to with SMS policies, processes, procedures and systems, advance Canadian interests—ICAO is the Montreal-based and Transport Canada has completed SMS assessments UN agency responsible for the safe and cooperative on all large operators. The results of these findings, along development of international civil aviation and of which Canada is a founding member. The department provides technical experts to assist in the development of standards and recommended practices for international civil NACC carriers have collectively embraced the principles of safety aviation. Member states are expected to include these management systems and embarked on a journey which brought standards and recommended practises in their laws and about a fundamental change in the industry’s culture towards safety. regulations. Departmental experts also participate in sev- Today, I can state unequivocally that such a transformation has taken place at all levels within our member airlines; employees, manag- eral international panels, working groups and committees, ers, and the highest echelons of the corporation up to the CEO level including the SMS International Collaboration Group, are engaged. the Best Practices Panel and the Western Hemispheric Captain Jacques Mignault Dialogue. The goal of these activities is to advance world- Safety Subcommittee National Airlines Council of Canada wide aviation safety.

28 See http://www.gazette.gc.ca/rp-pr/p2/2010/2010-11-10/html/sor-dors219-eng.html

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with further observations from Transport Canada inspec- Air taxi and air commuter operations are slated to tors and a report from the Auditor General of Canada, adopt SMS over the course of a three-year phase-in revealed that there were opportunities to improve, stan- period that will begin after SMS regulations for these dardize and advance SMS, something Transport Canada sectors come into force (the date for which has not yet is working towards. been fixed). To provide additional time to refine procedures, training and guidance material based on inspector SMS represents the next step in making our excep- and industry feedback, Transport Canada delayed SMS tionally safe air transportation system that much safer. implementation for smaller operators, and also developed an action plan to strengthen SMS implementation. Small air operators Floatplanes

Floatplane operations, which largely fall into the air taxi Number of Air Taxi Operator Certificates (CAR 703): 538 category of operations, drew public attention in 2010 Number of Commuter Air Operator Certificates (CAR 704): 89 after a series of fatal accidents, prompting Transport Canada to implement an updated safety awareness campaign for floatplane passengers and operators, and conduct more unplanned inspections to ensure that When discussing safety, it is important to note the floatplane companies are operating safely. distinction between the two categories of smaller commercial air passenger transportation: air taxi operations, In October 2010, Transport Canada held a floatplane whose aircraft have nine or fewer passenger seats; and safety workshop in British Columbia to further improve commuter operations, whose aircraft have 10–19 pas- the safety of floatplane operations. The workshop pro- senger seats. vided a forum for industry leaders and Transport Canada specialists to assess risk-mitigation strategies, includ- During the last five years, the safety of commuter ing the use of pop-out windows and portable flotation operations is comparable to airline operations, aver- devices (PFDs), and resulted in the formation of the aging four accidents a year. Within that period, air taxi Floatplane Operators Association30, a group commit- operations have averaged more than 40 accidents per ted to advancing floatplane safety. Transport Canada is year, a figure that is neither unprecedented nor abnor- also in the process of proposing regulations that would mal when compared with worldwide figures for this type require floatplane passengers to carry PFDs and crew of air travel. In 2010 and 2011, air taxi accidents fell to members to undergo egress training to help passengers 38 and 40 accidents respectively. and crew members safely and quickly exit the plane in In June 2007, Transport Canada significantly an emergency. enhanced the safety of CAR 703 and CAR 704—air taxi In relation to floatplane safety, Transport Canada also and commuter air—operations by introducing regula- issued a Civil Aviation Safety Alert31 (CASA) on June 3, 29 tions requiring Canadian commercial airplanes to be 2011 recommending the adoption of these four float- equipped with Airborne Collision Avoidance Systems plane-safety best practices: (ACAS), which function independently of ground-based air traffic control. ACAS reduces the risk of mid-air col- • use of upper body restraints by passengers in the lisions by identifying the presence of a nearby aircraft front seat; and providing a visual notification and an audio warning to avoid a loss of separation. • comprehensive safety briefing to passengers, including proper usage of personal flotation devices during and after an evacuation; • emergency evacuation training for flight crew; and • adoption of aircraft-safety design improvements to facilitate evacuation.

29 See http://www.gazette.gc.ca/archives/p2/2007/2007-06-27/html/sor-dors133-eng.html 30 See http://www.floatplaneoperators.org/ 31 See http://www.tc.gc.ca/eng/civilaviation/opssvs/managementservices-referencecentre-casa-2011-03-1325.htm

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The European Aviation Safety Authority (EASA) sub- General aviation sequently recommended that the European floatplane industry adopt these practices.

With 35,000 civil aircraft, Canada has the second largest civil Business aviation aviation aircraft fleet in the world. Its commercial sector ranges from international scheduled services to small, one-aircraft charter companies and business aircraft operators, and the number of light recreational aircraft increases every year. Number of Private Operator Certificates (CAR 604): 200

Canada’s civil aviation system has two primary cat- Personal aviation accounts for the majority of air trans- egories of aviation activities: commercial—operators portation accidents, averaging 111 per year for the last holding a 703, 704 or 705 operating certificate—and five years; flight training follows with an average of 39 private. Private operations can be further subdivided accidents per year, while aerial work averages approxi- into business and personal operations, with business mately 23 per year. aviation operations consisting of an aircraft or fleet of Considering the nature of these operations, personal aircraft operated by a business to transport passengers aviation is not expected to have a safety record that is (for example, employees or clients). on par with other forms of aviation. Business aviation has historically been one of the saf- Because general aviation continues to be an essen- est sectors of air transport, a trend that has continued tial component of the Canadian lifestyle—connecting through the last five years with two business aviation Canadians in large and small communities, contribut- accidents recorded. ing to the health of the economy and creating jobs—the Due to the safety record of this sector, regulatory aviation community depends on a safe, accessible amendments came into effect in 2005 allowing the and growing general aviation sector. Increasing costs, Canadian Business Aviation Association (CBAA) to issue increasing regulations and decreasing airspace and air- certificates and monitor operations of business aviation port accessibility dissuade many from participating in operators as a regulated third party. However, after deter- personal aviation. mining the Canadian public would be best served if these As a result, introducing new regulatory amendments activities were handled by the government, the Minister to enhance the safety of this sector can be a complex of Transport announced that effective April 1, 2011, process as any initiative that includes a price tag can Transport Canada would take back the certification and further restrict the viability of this sector. oversight functions for business aviation from the CBAA. With this change, Transport Canada is now responsible In overseeing this sector, Transport Canada attempts for issuing operating certificates to new applicants as to balance safety with sustainability. well as processing changes to existing certificates. Transport Canada intends to publish new regulations Aeronautical products, certification for this sector in Canada Gazette, Part II, in 2012— and airworthiness currently the department exercises its authority through an Interim Order.32 Aircraft maintenance In Canada, approximately 904 aircraft maintenance organizations verify that all aeronautical products in Canada are maintained to national and international airworthiness standards. More than 14,000 aircraft maintenance engineers (AMEs) licensed by Transport Canada perform tasks according to approved maintenance programs to verify the continued safety of the aircraft. If any faults are detected—in the aircraft structure or systems and controls, for example—AMEs take the appropriate actions to get the aircraft back in the air.

32 See http://www.tc.gc.ca/eng/civilaviation/standards/business-aviation-3934.htm

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The aerospace industry in Canada is experiencing In response, Transport Canada is proposing regu- unprecedented growth. Each year, Transport Canada lations that will require certain designated certified approves more than 1,500 new and modified aeronauti- aerodromes to install and maintain a Runway End Safety cal products built or operated in Canada. Products range Area (RESA). Transport Canada is also revising TP 312 – from advanced aircraft, avionics and electronics to space Aerodrome Standards and Recommended Practices33 in products and services. For example, in November 2010, cooperation with industry experts. The updated version Transport Canada certified the Bombardier Aerospace will address additional visual aids for pilots to help assess CRJ1000. Annual sales of Canadian aerospace prod- landing distances, Canadian and international RESA ucts and services total more than $20 billion – exports standards, and the engineered material arresting system account for roughly 80% of this figure. (EMAS) as an added safety measure. Transport Canada is committed to conforming to ICAO’s standard for a 150 Due to the significant economic contribution of this metre-long RESA.The department has also begun a risk sector, Transport Canada must not only be timely and assessment of increasing the RESA to 300 metres. thorough in its certification process, but also create the right conditions for prosperity. In relation to the former, Transport Canada has also taken added measures to Transport Canada attempts to find the right balance increase the safety of runways during Canada’s unique between speed and process. winters and issued several advisory circulars to reduce the risk of aircraft colliding with vehicles or other aircraft Transport Canada specialists review and verify design on the ground at Canadian airports. and performance data, supervise and perform ground and flight tests, and award the Transport Canada Type Certificate. Transport Canada is also responsible for the continuing airworthiness of aeronautical products. Engineered material arresting In relation to the latter, Transport Canada pursues system (EMAS) agreements with civil aviation authorities worldwide to Engineered material arresting system (EMAS) is an example of facilitate the export of Canadian aeronautical products. a ground arrestor system. Located beyond the end of the runway, On July 26, 2011, a Canada-European Union Bilateral EMAS is designed to stop an overrunning aircraft by exerting decel- Aviation Safety Agreement (BASA) came into force. eration forces on its landing gear. Applying EMAS can mean the difference between an accident and a minor incident. EMAS is a Under the agreement, the European Aviation Safety soft ground arrestor, which deforms under the weight of the aircraft Agency (EASA) will recognize certification of Canadian tire as it runs over it. As the tires crush the material, the drag forces aviation products and services, allowing the Canadian decelerate the aircraft and bring it to a safe stop. EMAS is popular in aviation industry to be much more competitive in the the U.S at airports that have difficulties complying with FAA rules European market. Civil aviation safety will also be on runway safety. enhanced, as EASA and Transport Canada will work cooperatively to resolve safety issues. A similar agreement was signed between Canada and the United States in 2000, and has had a positive effect on Canada’s civil Air navigation aviation industry. In Canada, NAV CANADA—a not-for-profit private com- Transport Canada is also working with the Federal pany—provides national civil air navigation services, Aviation Administration (FAA) to streamline FAA valida- such as air traffic control, flight information and weather tions of Canadian design approvals in support of the briefings, and oversees more than 12 million air traffic business needs of the Canadian aviation industry. movements a year, including global air carriers entering Canadian airspace. Airports and aerodromes In early 2011, air traffic control safety came under scrutiny after several lone air traffic controllers were When discussing aerodromes and the safety of Canadian found to be sleeping on duty in the U.S. During this time, airports, runway safety has been a prominent talking Canada’s air traffic control system was touted as one of point. On March 16, 2010, the Transportation Safety the safest and most successful systems in the world, Board of Canada (TSB) indicated that further measures due in part to NAV CANADA’s policies that help avoid were needed to reduce the risk of landing accidents and problematic situations such as those that occurred in runway overruns at Canadian airports.

33 See http://www.tc.gc.ca/eng/civilaviation/standards/business-aviation-3934.htm

2011Transportation in Canada 49 6 Air Transportation the U.S. For example, NAV CANADA controllers do not Research and Development to work alone and they must have at least 10 hours off between shifts. NAV CANADA also permits naps to miti- improve aviation safety gate the effects of fatigue, if needed. Transport Canada’s Transportation Development Centre NAV CANADA won its third Eagle Award34 in 2011, (TDC) is currently carrying out R&D that aims to address which is given to the world’s best air navigation service two important aviation safety concerns: ground and provider by the International Air Transport Association airborne icing. Advances in materials and ice engineer- (IATA). The Eagle Award honours outstanding perfor- ing over the past 20 years have led to the development mance in customer satisfaction, cost efficiency and of innovative technologies and materials that may sig- continuous improvement. nificantly reduce ice accumulation on aircraft surfaces. Consequently, ongoing R&D activities of the Cold Climate In addition to the national services provided by NAV Aviation Technologies (CCAT) program are investigating CANADA, approximately 200 other organizations pro- ice-phobic materials, alternative de-icing technologies vide air navigation services on a local or regional basis. and remote sensor technologies to enhance air safety Transport Canada regulates and oversees this industry and assess the effectiveness, usefulness and cost fea- to verify its safety. sibility of these emerging technologies. On December 21, 2011, air navigation safety was The CCAT R&D initiative aims to address important avi- further improved when amendments to the Canadian ation safety concerns via the development of innovative Aviation Regulations came into force requiring a person solutions to ground icing and airborne icing of aircrafts. responsible for a building, structure or object constitut- Through extensive R&D work and effective partnering an obstacle to air navigation to mark and light that ships with organizations including the Federal Aviation obstacle. The amendments removed the necessity to Administration (FAA) and the National Aeronautics and use ministerial orders for the same purpose, which was Space Administration (NASA), the National Research a slower process that resulted in longer exposures to Council (NRC) and Environment Canada (EC), the TDC unsafe situations. has begun to carry out multiple aviation R&D activities, is investing close to $2M (million) in R&D funding over three years and during this time is leveraging over $12M from AUTOMATIC DEPENDENT all its partners on various projects taking place worldwide. SURVEILLANCE-BROADCAST (ADS-B) R&D activities focusing on ground icing are carried out On January 15, 2009, NAV CANADA began implementing the at various sites in Ottawa including the NRC’s Propulsion use of ADS-B in Northern Canada. ADS-B is a next generation air and Icing Wind Tunnel (PIWT), the Climactic Engineering traffic surveillance system that uses a global navigation satellite Facility (CEF) and Montreal’s Pierre-Elliot Trudeau (PET) system, aircraft avionics, and ground infrastructure to automatically transmit flight information between aircraft and air traffic control and Mirabel Airports. These sites allow the research every second. This information includes aircraft identification, posi- teams to conduct controlled simulations of precipitation tion, altitude and velocity. The benefits of ADS-B include enhanced including snow or ice pellets and observe their interac- safety by increasing the areas of surveillance coverage and fuel tions with anti-icing fluids, ice phobic coatings and other savings related to the opportunity for more user preferred routes. technologies in development that may enhance air safety. ADS-B will reduce separation minima for equipped aircraft and The PIWT permits the use of a cross-section of model allow more aircraft to follow the most efficient flight trajectory. Regional Jet (RJ) wing and the replication of aircraft take- NAV CANADA plans to install ADS-B initially in areas where offs in cold climate conditions thus permitting R&D teams radar services are not offered. When this is complete, Canadian to capture data and record observations that can help airspace will be fully covered with radar and/or surveillance. Transport Canada does not mandate ADS-B in Canada, though its assess overall effects of new technologies. use is growing and may eventually replace the current ground-based The CEF is central into assessing the thresholds and radar surveillance system to some extent. In March, 2011, Transport Canada issued guidance material for aircraft owners and air opera- limits of de/anti-icing fluids and observe interactions tors regarding airworthiness and operational approval in relation of new products in simulated precipitation conditions; to ADS-B. new fluids that are being developed that aim to leave a

34 See http://www.iata.org/pressroom/pr/pages/2011-06-06-03.aspx

50 Transportation2011 in Canada Air Transportation 6 significantly lower environmental footprint compared to their predecessors and products inherent with ice pho- How does icing affect safety? bic properties are constantly in development. The CEF Airborne icing can occur in various forms of precipitation and at can replicate outdoor temperatures into the lower -40 different altitudes during flight. It can affect aircraft travelling through Celsius range on a year-round basis thus providing the broad areas of cloud associated with deep convection, where they TDC R&D teams with a suitable environment where vari- occasionally experience ice crystal icing. This is a phenomenon that ous precipitation conditions (freezing rain, freezing fog) has been implicated in several jet-engine power losses and instrumen- can be replicated in a controlled environment. The PET tation malfunctions. Currently, aircraft technologies (i.e., radar, icing and Mirabel test sites also allow the R&D team to con- detection equipment) cannot effectively detect these conditions. duct seasonal outdoor simulations and full scale testing Ground icing occurs due to cold temperature precipitation on of aircraft and emerging technologies. various sections of the aircraft, including its wings and engines, and poses a great risk to the airworthiness of the aircraft and the safety The impacts of climate change on Canada’s northern of passengers, as it can significantly impact aircraft performance. transportation system may be significant. Current prac- Currently aircraft operators and airport authorities generally miti- tices to ensure the safety of aircraft activities can create gate ice accumulation with de/anti-icing fluids. additional pressures on sensitive ecological regions. Further R&D in de/anti-icing technologies may lead to important advancements and could alleviate these risks 6.7 Security in the future. Through the CCAT initiative, Transport Canada is Passenger screening investing significant R&D resources to contribute to an international partnership between industry and govern- Following a review of CATSA—the agency responsible for ment that will gather data on these phenomena and screening people and baggage at designated Canadian provide valuable information on the climate conditions airports—by the federal government in 2010, several attributed to ice crystal icing. The long-term objective changes were made the following year to improve pas- is to improve scientific understanding of ice formation senger convenience and screening efficiency. To help and growth processes in these conditions, and in turn, passengers better plan for their trips, CATSA’s website develop policy and regulations that promote operating now displays the current screening point ‘wait times’ at an aircraft in a way that minimizes ice formation. The eight of Canada’s largest airports (Vancouver, Calgary, aviation sector—including engine and air-data probe Edmonton, Winnipeg, Ottawa, Toronto, Montreal and manufacturers—stands to gain immense benefits from Halifax). CATSA has also redesigned many of its screen- this knowledge-gathering exercise due to the improved ing checkpoints to improve the flow of passengers diagnosis of engine icing/power loss and damage through the screening lanes. In addition, CATSA has events, and the incorporation of design changes that created dedicated screening lanes for families, those will lead to safer engines. with special needs, and frequent, known travellers. In 2011, CATSA also improved its service delivery model—which involves third-party screening contrac- tors—by creating a new, four-region contracting model. This reduced the number of regions by two and the number of contracts from seventeen to four35. See Chapter 5.1 for more details.

35 Contract were awarded to G4S Solutions Canada (Pacific Region), Garda Security Screening (Prairies and Central Regions) and Securitas Transport Aviation Security (Atlantic Region)

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Air Travellers Security Charge and reduce the compliance burdens on industry. The Action Plan also promotes the harmonization of advance The Air Travellers Security Charge (ATSC) came into effect data requirements for clearing cargo shipments at the in April 2002 to fund the air travel security system, includ- border, which will simplify the industry’s reporting bur- ing CATSA, Transport Canada’s regulations and oversight den on both sides of the border. The development of activities, and the provision of Royal Canadian Mounted a harmonized cargo security strategy will assist trade Police officers on selected domestic and international by promoting compatible screening methods for goods flights. The ATSC is payable by air travellers, who prin- and cargo before they leave foreign ports bound for cipally and directly benefit from the Canadian air travel Canada or the U.S. security system. All ATSC funds, including any applicable In addition to the work undertaken with the United Goods and Services Tax (GST) or the federal portion of States, Transport Canada worked at length with partner the Harmonized Sales Tax (HST), are intended to fund the countries and international organizations, such as the air travel security system. The charge is structured to pro- ICAO and the World Customs Organization, to support vide revenues that are roughly equivalent to expenses for the development of common standards, definitions and the air travel security system over time. procedures to improve cargo security globally. The ATSC applies to flights between the 89 Canadian Transport Canada also introduced changes to air airports36 where CATSA provides air travel security ser- cargo security that outline new requirements for those vices. The charge does not apply to flights that arrive at handling air cargo in Canada. At the same time, a pro- or depart from other Canadian airports. The ATSC also gram was established to improve oversight within the applies to transborder flights to the U.S. and other inter- air cargo security system, providing for ongoing inspec- national locations that depart from Canadian airports. tions and compliance activities with air carriers and Upon ticket payment, the air carrier collects the fee, members of the air cargo security program. Extensive which is paid by those purchasing a passenger ticket. stakeholder consultations were undertaken to promote Current ATSC rates37 are $7.48 for domestic (one-way), compliance with program requirements. $14.96 for domestic (round-trip), $12.71 for transborder, and $25.91 for other international flights (See Evaluating screening technologies was another area Addendum Table A30 for more details). of focus for Transport Canada’s air cargo security program over the past year, with work undertaken to test Air cargo security and qualify screening equipment and develop standards for screening technologies and processes. Pilot projects In February 2011, the federal government announced a were conducted with airport authorities, air carriers and shared vision with the United States on perimeter secu- freight-forwarding companies to pursue shared threat rity and economic development, which included working detection research, testing and evaluation efforts. towards the development of a harmonized air cargo security strategy. This vision was a central component International harmonization of the Action Plan on Perimeter Security and Economic Competitiveness announced December 7, 2011. The The Canada–U.S. Action Plan is a good example of Action Plan will increase the speed of legitimate trade bilateral harmonization, as is participation at the ICAO, and travel, improve security in North America, and align where Canada works closely with international partners Canada–U.S. regulatory approaches. A harmonized to share information and develop better and more har- cargo security strategy will be developed as part of this monized security practices that make the movement Action Plan, including common standards for screening of people and goods on a global scale possible. The inbound air and marine cargo (at the last point of depar- following three areas are examples of Canada’s harmo- ture for air and first point of arrival for marine). Under nized aviation security practices and efforts. the principle ‘cleared once, accepted twice’, this cargo would then be given accelerated passage if it crosses Facilitation of duty-free goods the land border. Canada and the U.S. will work to mutu- Through a bilateral agreement with the European Union, ally recognize each other’s air cargo security programs, passengers whose flights originate in Canada and helping to better utilize screening efforts and resources Europe can now pass through Canadian and European

36 For a list of airports, please see http://laws-lois.justice.gc.ca/eng/regulations/SOR-2002-180/page-2.html#h-3 37 ATSC rates are set by the Minister of Finance.

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screening check-points while possessing duty-free liq- any size or length remain prohibited. These changes uids, aerosols and gels purchased within their originating better align Canada’s list with those of the ICAO and airport—provided the items are packaged in specially international partners, including the United States and designed security bags (security tamper evident bags). European Union. Based on a risk assessment, CATSA screens these bags in Canada using specialized equipment. Although these egulatory review secure bags are a short-term solution for duty-free liq- R uids, aerosols and gels, Canada is collaborating with Through the Aviation Security Regulatory Review cur- international partners to develop a longer-term solution rently in progress, Transport Canada is reassessing to reduce or eliminate current restrictions on these types its aviation security regulatory framework under the of goods. Aeronautics Act. The goals of the Review are to renew Known traveller and NEXUS aviation regulations to respond to the challenges and opportunities of the 21st century, and to make them Transport Canada continues to evaluate approaches less burdensome for industry and easier for industry to screening that would more closely match the level to understand regulatory requirements. Introducing of risk posed by a passenger and his or her bag- requirements for Canada’s aviation industry to put gage. Transport Canada is also working with CATSA Aviation Security Programs into action is one element of to improve the flow of passengers through screening this Review. These programs will further align Canada’s lanes while still maintaining a high standard of security. regulations with international standards and practices As part of this ongoing process, Transport Canada sup- set by the ICAO, and will help stakeholders improve ported a joint project between CATSA and the Canada their ability to respond to new and unforeseen threats Border Services Agency in 2010 that tested a NEXUS and risks by: priority lane38 concept at domestic lanes in three major airports. To assess the program’s success, the perfor- • improving awareness and understanding of aviation mance of the NEXUS priority lane is being measured; security-related roles and responsibilities; the results will be used to improve the program. • encouraging and coordinating the sharing of avia- In early 2011, the NEXUS program was expanded to tion security information both inside and outside key Canada’s eight largest airports, where NEXUS members stakeholder organizations, when and where appropri- can now use dedicated lanes applying Canada’s high ate; and security standard in a quicker process. • engaging the entire stakeholder organization so as to The 2011 Action Plan on Perimeter Strategy and be more involved and proactive in the management, Economic Competitiveness expanded the priority lane coordination, integration and continuous improve- program to include designated NEXUS lines at U.S. ment of security through management of risk, training, trans-border security screening checkpoints. Just as increased awareness and improved preparedness. at domestic checkpoints, adding a designated screen- The first step of the regulatory modernization pro- ing lane will result in improved screening efficiency and cess was pre-publishing the Canadian Aviation Security improved client satisfaction. Regulations, 2012 in the Canada Gazette, Part I in Harmonized prohibited items list February 2011; the Regulations then came into effect January 1, 2012. The Canadian Aviation Security Taking into consideration investments made into new Regulations, 2012 completely replaced previous regula- and improved passenger screening equipment and tions with a more user-friendly structure and provisions other security improvements, Transport Canada made that use clear, well-defined and modern language. The changes to the list of items that passengers cannot Regulations also include requirements for airports’ bring with them onto aircraft. Small scissors and tools Aviation Security Programs and their key tenants who not longer than six centimetres (excluding the handle) have security responsibilities. are now permitted in carry-on baggage. Knives of

38 A NEXUS priority lane allows members of the NEXUS program (which expedites pre-approved travellers across the Canada-U.S. border) to pass through an accelerated screening process, reflecting the fact these individuals have already been vetted as part of the program.

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Marine Transportation 7

With an improved, modernized infrastructure, a heightened emphasis on efficiency, safety, security and the development of environmental regulations that support international standards, marine transportation in Canada plays a critical role in trade growth and economic prosperity.

7.1 oVERVIEw of Marine Groupe Desgagnés. A recent study by the St. Lawrence Economic Development Council (SODES) and Quebec’s Transportation department of transportation (MTQ) estimated that in Quebec alone, the marine industry produces $3 billion Canada’s marine industry comprises domestic marine in economic activity every year.1 service operators who provide both domestic and international shipping services, as well as international The marine industry in Atlantic Canada is engaged shipping lines calling at major Canadian ports. The in a myriad of activities including container transporta- domestic sector can be viewed under four geographical tion to Newfoundland by Oceanex, oil platform resupply lenses: the Pacific west coast region; the Great Lakes/ by companies like Secunda Marine, shuttling crude oil St. Lawrence; the Atlantic region, and the northern region. between platforms and oil terminals operated by companies such as Canship Ugland Ltd., and providing a The Pacific west coast region boasts a large and large number of intra- and inter-provincial ferry services, diverse fleet of vessels engaged in barging and tow- such as Marine Atlantic and Northumberland Ferries. ing of cargoes on inland waterways (e.g., Fraser River, The region also has a rich shipbuilding history, which will Burrard Inlet), on coastal routes within the Gulf Islands be augmented even further by Halifax Shipyards carry- and the Strait of Juan Fuca, and on routes to the Queen ing out a $25 billion contract from the Department of Charlotte Islands and Kitimat. Some of the larger opera- National Defence to build 21 combat ships over the next tors in this region include Seaspan Marine Corporation, 30 years (see Section 12.3). Pacific Towing Services Ltd. and SMIT Harbour Towage. There are also a number of ferry services in the area, In the northern region, marine transportation plays mainly operated by B.C. Ferries (see the Ferry Services a key role in community resupply as well as resource section in this chapter for more details). development. Northern Canada makes use of two clearly delineated marine systems: the western Arctic Great Lakes/St. Lawrence area operators carry dry bulk and the eastern Arctic. and liquid bulk cargo, with vessels meeting the maximum size and capacity limits of the Great Lakes and In the western Arctic system, marine operations the St. Lawrence Seaway system. The St. Lawrence primarily occur in the Mackenzie River Watershed Seaway Management Corporation, a not-for-profit (including the Mackenzie River and Great Slave Lake), corporation established by seaway users and other the Arctic coast and islands, and Alaska, as well as interested parties, follows its legislated mandate to Richmond, B.C., on occasion. A fleet of tugs and administer, manage and operate the portion of the dual-purpose barges brings, among other things, bulk system under Canadian jurisdiction, while U.S.-based petroleum products and dry cargo for communities, Saint Lawrence Seaway Development Corporation does defence installations, and oil and gas exploration sites the same for the U.S. segment. Key marine carriers in across the North while transporting natural resources this area include: Fednav International Ltd., Algoma extracted in the North to markets in the South. The larg- Central Corporation, Canada Steamship Lines and est marine operator in the western Arctic is Northern

1 Quebec Marine Industry Economic Impact Study, produced by Les Conseillers ADEC Inc. for the SODES and MTQ.

2011Transportation in Canada 55 7 Marine Transportation

Transportation Company Limited (NTCL). As well, a ferry Pacific Pilotage Authority (PPA), Great Lakes Pilotage service operates in the Yukon along with five ferry ser- Authority (GLPA), the Laurentian Pilotage Authority (LPA) vices offered in the Northwest Territories. and the Atlantic Pilotage Authority (APA)—that provide safe, reliable and efficient marine pilotage and related The government of Nunavut coordinates the eastern services for commercial vessels in the coastal waters of Arctic sealift of dry cargo and bulk fuel for government British Columbia, within the Great Lakes, in Canadian departments, communities and residents. Sealift services waters in the Laurentian Region and in Atlantic Canada. are accessible to other shippers under the same contractual terms and conditions. Services include resupply to the eastern Arctic from Churchill and Montreal (and 7.2 2011 Year in Review environs), dry cargo sealift, general cargo, use of roll-on/ roll-off vessels, tug and barge combination, and delivery tankers for bulk fuel. Many commercial shipping com- Economic framework panies operate in the eastern Arctic, including Nunavut and infrastructure Sealink and Supply Inc. (NSSI), Nunavut Eastern Arctic Shipping (NEAS), NTCL, Groupe Desgagnés and the • Canadian marine freight traffic reached 392 million Woodward Group. tonnes in 20103, an increase of 10% over 2009 (see Canada’s ports and harbours are integral to Canada’s Tables M18 and M23). Some 58 million tonnes were transportation system. They serve as vital links and recorded in domestic traffic flows, 103 million tonnes gateways that facilitate domestic and international eco- in transborder traffic, and 231 million tonnes in other nomic activities. Canada is home to more than 540 ports international traffic. Marine transportation services and more than 940 small craft and fishing harbours (see handled $170.4 billion in international trade in 2010 Addendum Tables M2 and M7). Under the National (up 12% from 2009), with $88.9 billion in imports and Marine Policy, three categories of ports2 exist: Canada $81.5 billion in exports (see Table M28). Port Authorities (CPAs), regional/local ports, and remote • In 2010, the 17 Canada Port Authorities (CPAs) ports. All major Canadian ports benefitting from inter- handled 269 million tonnes of port traffic—69% of national shipping services have links with the country’s Canada’s total tonnage handled at all Canadian ports. rail network. Ports with container-handling capabilities The largest volumes in recent years passed through include Vancouver, Prince Rupert, Toronto, Montreal, Vancouver, Montreal, Québec City, Sept-Îles and Halifax, St. John’s and Saint John. Ports such as Saint John (see Map 12 and Table M23). Vancouver, Hamilton, Québec City, Sept-Iles and Saint John also handle significant volumes of bulk commodi- • In 2010, the rate of containerization4 was highest for ties. Map 12 and Table M23 shows volumes handled for freight unloaded at Pacific ports, reaching a record- most of the 17 CPAs. Of note, in February 2012, the Port high of 58.3% (see Table M26). Nationally, the of Oshawa became Canada’s 18th CPA. containerization rate was 9.9% for outbound freight and 14.8% for inbound freight, or 11.6% overall. On the safety side, the Canadian Coast Guard, a Special Operating Agency within Fisheries and Oceans • By volume, bulk cargo (largely natural resources) Canada (DFO), allows Canada to exert influence over represented the largest share of port traffic tonnage. its waters and coasts. The Coast Guard delivers on The most significant imports that moved through public expectations of clean, safe, secure, healthy and Canadian ports include petroleum products, minerals, productive waters and coastlines. It achieves this mis- and coal, while significant exports include minerals sion through eight services, including marine navigation, (iron ore), petroleum products, coal, and grain. environmental response services, search and rescue • The 2011 navigational season for the St. Lawrence services and maritime security. The Coast Guard is also Seaway—its 53rd—spanned a record 284 days, responsible for icebreaking, dredging and marine com- opening on March 22nd and closing December 30th. munications and traffic management. During that time, 37.5 Mt passed through the system, Another key component of marine safety is pilotage, up 2.5% compared to the previous year. Increases in regrouped under four federal Crown corporations—the bulk liquid volumes, salt and scrap metal more than

2 At the end of 2010, Canada had 17 CPAs (one Harbour Commission), plus 41 regional/local ports and 26 remote ports operated by Transport Canada. A total of 239 other ports were previously operated by Transport Canada but have been transferred. 3 The most recent year for which information is available. 4 Share of total tonnage carried by container.

56 Transportation2011 in Canada Marine Transportation 7

offset a 6% drop in grain volumes. The St. Lawrence for RTI to expand its capacity to handle coal and other Seaway Management Corporation also reached a commodities shipped through the facility. new three-year labour agreement with its employees. • As of January 2012, more than 62,000 vessels were Environment registered in Canada, including 19,660 pleasure craft, 23,559 fishing vessels and 4,482 passenger craft. More • On October 25, 2011, Canada signed the 2010 than 45,000 of these vessels weigh less than 15 gross Hazardous and Noxious Substances (HNS) Protocol tons5—a volume measurement derived by multiplying a (subject to ratification), which includes roughly 6,500 vessel’s length, breadth and depth by a constant factor. substances that may pose a pollution hazard or cause other damages or injuries. Should an incident occur, • Marine Atlantic Inc. chartered two new vessels in 2011 the Protocol allows access to an international fund, to replace its two oldest—the MV Caribou and the MV which, together with the shipowner’s liability backed Joseph and Clara Smallwood. The new vessels—the MV by compulsory insurance, will provide about $500 mil- Blue Puttees and the MV Highlanders—entered into reg- lion in compensation for any damage that may result. ular ferry service in March and April 2011, respectively. • Transport Canada continued to develop new domestic • Foreign participation in Canada’s coasting trade— regulations that support international standards to defined as the transportation of goods or passengers prevent pollution from vessels operating in Canadian between points in Canada and any activity of a com- waters. Implementation and enforcement of interna- mercial nature—has remained low and focused tional standards remain ongoing, through inspections primarily on tankers and special-purpose vessels for and aerial surveillance. offshore activities (see Table M24). • Transport Canada adopted measures to further pro- • CPAs are financially self-sufficient (see Tables M8 and tect the environment from the introduction of invasive M9). In 2010, overall CPA revenue reached $456.5 mil- species into Canada’s waters from vessels entering lion—an increase of 18% over 2009. Total net income Canada, and continued strong advocacy efforts to for CPAs totalled $101.7 million. In 2010, gross rev- harmonize associated regulations in both Canada and enue charges paid by CPAs to the federal government the United States. totalled $25.8 million. • While the marine sector contributed to the majority of • In 2011, CPAs continued to expand their holdings 6 transportation-related SOx emissions, it accounted and activities in response to commercial demands. for 6% of total SOx emissions in Canada. The marine They also undertook capital projects to modernize sector contributes marginally to emissions of air and improve Canada’s marine transportation infra- pollutants other than SOx such as volatile organic structure, and pursued business opportunities with compounds (VOCs) and greenhouse gases (GHG). various shippers and marine terminal operators. CPAs also engaged in a number of capital and maintenance • In 2011, Transport Canada continued development of projects that aimed to develop or maintain port lands regulations to implement the North American Emission and assets. As well, shippers, marine operators and Control Area under the Canada Shipping Act, 2001. A terminal operators invested in new marine terminals formal discussion paper was released to stakehold- and new equipment. ers last fall that set out the regulatory approach and included an alternative regime to control air emissions • In 2011, Ridley Terminals Inc. (RTI)—a Crown corporation for vessels operating in the Great Lakes. that operates a marine bulk terminal on land leased from the Prince Rupert Port Authority—handled 9.1 • In March 2011, the International Joint Commission million tonnes of cargo. Strong global demand for coal published its 15th biennial report on the Great Lakes continues to drive growth, particularly in Asia, and RTI Water Quality Agreement. The report contains 32 forecasts increased throughput volumes, revenue and recommendations including the establishment of an net income. In light of this expected growth, the fed- incident command system-type structure to prevent and eral government approved a multi-year capital project respond to the emergence of aquatic invasive species.

5 For further details on registered vessels, see http://wwwapps.tc.gc.ca/Saf-Sec-Sur/4/vrqs-srib/default.htm 6 Sulphur oxide.

2011Transportation in Canada 57 7 Marine Transportation

Safety • Transport Canada’s outreach efforts in 2011 on several marine security issues included: • In 2011, Transport Canada continued to address –– hosting an Integrated Maritime Commerce Resilience marine public safety through regulatory develop- (MCR) planning workshop with the ports of Hamilton, ment, inspection and enforcement, alignment with Halifax and Montreal to encourage communication, international standards, and improved training of coordination and collaboration between the ports in marine inspectors. case of disruption to maritime commerce; • Transport Canada emphasized safety within the –– organizing three regional law enforcement work- Canadian shipping industry by completing its two- shops to bring together municipal, provincial and year pilot project on safety management systems and national police services with responsibilities for holding public and internal consultations on proposed marine security to discuss best practices and les- regulations for mandatory implementation. Canada sons learned regarding Small Vessel and Facility is also moving toward regulated inspections based (SVF) security; on risk factors such as compliance history, vessel age and type, and area of operation. Through this –– conducting consultations on proposed amendments approach, vessel inspections will occur where most to the Marine Transportation Security Regulations needed, based on assessed risks to Canadian citi- (MTSR) at the Canadian Marine Advisory Council’s zens, waterways and ports. annual meeting in November 2011; and –– participating and representing Canada in marine Security security-themed workshops in the Americas under the Organization of American States’ Inter-American • In the context of the Perimeter Security Action Plan Committee Against Terrorism Port Security announced in December 2011, several marine trans- Assistance Program. portation initiatives aimed at enhancing security will be pursued in the coming months and years, including: –– establishing a unified approach to screening cargo 7.3 2007–11 Recap arriving from offshore through the creation of a strategy to identify and manage risks with inbound Economic framework cargo arriving in Canadian ports and airports; and infrastructure –– managing traffic in the event of an emergency by developing regional-level recovery plans should The 2007–2011 period was largely dominated by the freight flows be disrupted; and worldwide financial crisis and economic downturn, which considerably impacted the Canadian economy. –– developing and implementing processes, procedures Despite the uncertainty of this period, various initiatives and policies to enable an effective, shared under- were undertaken to optimize the use of marine trans- standing of activities, threats and criminal trends portation and enhance the overall efficiency of Canada’s or other consequences in the air, land and transportation system. For example, amendments to the maritime environment. Canada Marine Act (announced 2008) created a more • In December 2011, Canada and the United States flexible financial regime for Canada Port Authorities and agreed to the Regulatory Cooperation Council’s (RCC) highlighted a long-term role for ports. These amend- Joint Action Plan to increase regulatory transparency ments were complemented by policy initiatives that between the two countries. The Action Plan aims to focused on increasing revenue generation options for better align the two countries’ regulatory environ- ports as well as strengthening international relations ments and thus reduce barriers to trade, lower costs in support of trade through the Asia–Pacific Economic for consumers and businesses, and foster economic Cooperation Port Services Network. In the same vein, opportunities on both sides of the border. in the hopes of attracting new business, an incentive program was introduced by the St. Lawrence Seaway • Marine security initiatives include further harmonization Management Corporation. of regulations and ongoing collaboration with the United States’ marine security regime, as well as the In 2009, Canada amended the Marine Liability Act expansion and development of joint programs in the (MLA) which allowed for Canada’s ratification of the Great Lakes and St. Lawrence Seaway. International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunkers Convention) and

58 Transportation2011 in Canada Marine Transportation 7 accession to the Protocol of 2003 to the International Supplementary Letters Patent were issued to reflect Convention on the Establishment of an International administrative changes. Fund for Compensation for Oil Pollution Damage, 1992 (Supplementary Fund Protocol), bringing the amount The federal government worked in partnership with of compensation for oil pollution damage in Canada to CPAs and marine transportation stakeholders over the last $1.3 billion (from just over $500 million). The ratification five years to enhance port productivity and performance of the Bunkers Convention introduced a compulsory as well as Canada’s supply chains and trade corridors: insurance requirement for ships over 1000 gross reg- • In 2008, the ports of Vancouver, Fraser River and North istered tonnage that carry bunker oil: the shipowner’s Fraser Port Authorities were amalgamated into Port liability for bunker oil pollution damages must be cov- Metro Vancouver. This was a key policy measure that ered. These legislative amendments also provided for: positioned these ports to enhance investment oppor- • introduction of a maritime lien for Canadian ship sup- tunities, improve their competitiveness in the global pliers and ship repairers against a foreign vessel for market, and optimize port planning. unpaid invoices; • In 2008, the Gateway Performance Table initiative was • a general limitation period of three year for maritime launched to examine current and future competitive- claims; and ness of the Asia–Pacific Gateway as a supply chain portal. Phase 2 of the initiative was launched in late • exclusion of adventure tourism activities (such as 2010 and focuses on performance metrics, opera- kayaking and whitewater rafting) from the passenger tions optimization, and productivity for inbound and liability regime in Part 4 of MLA to allow adoption of outbound supply chains. compulsory insurance regulations. • In 2009, Transport Canada completed a manda- In 2010, Finance Canada waived the 25% tariff on tory review of the Vancouver Container Trucking the import of ferry boats of 129 metres or more, and Regulations. Recommendations from the review on all general cargo vessels and tankers of any size, to included the formation of a Steering Committee, with encourage renewal of the Canadian fleet through low- representatives from the province of British Columbia ered costs for such vessels. and Port Metro Vancouver, to discuss emerging issues and work towards long-term stability. Finally, the federal government invested significantly in Marine Atlantic Inc. (MAI), a Crown corporation that operates a ferry service between Port aux Basques, NL Environment and North Sydney, NS, which fulfills a constitutional obligation. Additional funding of approximately $950 million Since 2008, Canada has either ratified or acceded to 12 was announced between 2007 and 2010 to revitalize International Maritime Organization (IMO) Conventions MAI and renew its fleet and shore facilities. Also in 2010, concerning protection of the marine environment, $76.4 million was announced to support the extension biodiversity, vessels, goods and personnel. This has of three other ferry services in Eastern Canada through enabled Transport Canada to fully enforce safety and March 2014, including remote service between Prince environmental standards in accordance with the Canada Edward Island and the Magdalene Islands in Quebec. Shipping Act, 2001. These efforts contributed to the successful adoption of the North American Emission Control Area (ECA) proposal, and to the development of Ports environmental standards for ballast water and air emis- Between 2007 and 2011, the federal government sions. Canada will continue to participate in the IMO updated the legal and governance framework for CPAs work to advance uniform, global measures to address to enable these ports to pursue commercial opportu- GHG emissions from existing marine vessels. nities that support Canada’s marine transportation Beginning in 2008, a patchwork of state ballast infrastructure and trade objectives. This led to amend- water requirements on the Great Lakes, combined with ments to the Canada Marine Act in 2008 to allow separate and evolving regulatory programs involving increased borrowing authority, giving them greater the United States Coast Guard and the Environmental flexibility to respond to investment opportunities. Protection Agency, significantly complicated environ- During that period, the government also issued 59 mental requirements for vessels operating in the Great Supplementary Letters Patent—amendments to exist- Lakes. In particular, New York State introduced diffi- ing CPA Letters Patent. Most of these (48 in total) were cult ballast water requirements. In response, Transport issued to update real property holdings; five were issued Canada initiated an interdepartmental working group on to update port governance and activities; and three were ballast water to lead a Government of Canada advo- issued to amend borrowing limits. The remaining three cacy campaign seeking continuance of seaway trade

2011Transportation in Canada 59 7 Marine Transportation and a compatible regulatory approach in our navigable Transport Canada is making significant headway in boundary waters. Those requirements were withdrawn implementing a modern policy framework and program by New York State in February 2012. management tools related to vessel inspections that are risk-based, harmonized with international standards and Domestic marine GHG emissions increased by 16% that support appropriate delegation of some inspection between 1990 and 2008, from 5.0 Mt of CO e to7 5.8 2 responsibilities to qualified Transport Canada-approved Mt of CO e (see Table EN10). This can be attributed 2 organizations. Encouraging small vessel safety in to growth in total tonne-kilometres as a result of ris- Canada has been a particular focus. Efforts include the ing international trade, but the increase was somewhat 2011 launch of the renewed Small Vessel Compliance mitigated by a shift toward larger, more efficient vessels. Program (non-pleasure craft) for vessels under 15 gross During the 2008 to 2020 period, domestic marine GHG tonnes and carrying 12 passengers or fewer, as well emissions are expected to increase by 20% (or 1.5% as improved standardization and delivery of national annually), rising from 5.8 Mt to 7.0 Mt of CO e, due to 2 recreational boating safety programs. These national traffic increase. programs took a new, integrated approach to boating Between 1990 and 2009, domestic marine sector safety that incorporated compliance and enforcement, emissions of various air pollutants as a share of total emis- education and awareness, program management, and sions of that pollutant increased marginally or remained the regulatory framework. unchanged (see Table EN11), and overall air pollutant emissions from the marine sector decreased. Marine PM 2.5 ecurity 8 S emissions fell by 1,583 tonnes (-14%), SOx emissions fell 9 by 31,965 tonnes (-28%), NOx emissions fell by 17,387 Several new marine security measures, programs and tonnes (-13%), VOC emissions decreased by 659 tonnes protocols came into force between 2007 and 2011 and (-14%) and CO emissions10 fell by 1,560 tonnes (-14%). have changed how the marine industry maintains its levels of vigilance. Transport Canada, under its Marine Safety Security Contribution Program, allocated $7 million in funding for security enhancements in 2007 and $12 Canada’s maritime safety record over the 2007–2011 million in 2008 before the program ended in November period has shown marked improvements, as shown 2009 (a total of $112 million was allocated under the in Tables S14 and S15. During that period, accidents program over its duration). Overall, some 1,226 projects dropped 31.5%, from 400 to 274, while fatalities were funded, including security improvements such as slipped from 13 to 12. The accident rate per million fences, security cameras and modernized perimeter vessel-kilometres dropped by 10.1% to 19.5. security. Ports, marine facilities, domestic ferry terminal operators and domestic ferry vessel operators were Transport Canada continues to evolve to meet the new able to apply for funds to help pay for improvements to strategic directions for safe marine transportation, work- meet their obligations under the Marine Transportation ing within the new regulatory regime established by the Security Regulations (MTSR). Canada Shipping Act, 2001 which came into force July 2007. Several more regulations have been updated to In 2008, the Marine Transportation Security Clearance align with the new Act and better serve the safety interests Program (MTSCP) was fully implemented at the follow- of the industry and Canadians. These include regulations ing Canadian ports: Vancouver, Montreal, Halifax, Prince relating to collision avoidance, fire drills, navigation and Rupert, Victoria, Windsor, Hamilton, Toronto, Québec City, small vessel safety. The vessel registry has also contin- Saint John, and St. John’s, as well as at the St. Lawrence ued to streamline its requirements and processes and has Seaway Management Corporation. The MTSCP aims to remained a key mechanism for distributing safety bulletins reduce the risk of security threats by preventing unlaw- that help keep vessel owners informed of important safety ful interference with the marine transportation system. information. Accidents and fatalities continue to decline. This is accomplished by conducting background checks on marine workers who perform particular duties or who have access to certain restricted areas. In 2009, the Marine Event Response Protocol (MERP) was developed and adopted as an Annex to the Federal

7 Carbon dioxide equivalents. 8 Particulate matter emissions. 9 Nitrous oxide. 10 Carbon oxide. 60 Transportation2011 in Canada Marine Transportation 7

Emergency Response Plan. MERP is a means of coor- regions of the world. Many international container lines dinating a set of government responses to a significant call at Canadian ports as members of alliances of con- marine event. That year, the Marine Security Program tainer shipping companies and as independent lines. contributed to the development of a Maritime Annex to These include Maersk Line, Hapag-Lloyd, Mediterranean the Joint Framework for the Movement of People and Shipping Company, OOCL, Hanjin Shipping, CMA CGM, Goods During and Following Emergencies, which was and APL. A significant number of independent lines signed by the United States and Canada and that out- serve Canada as well. Liner services provide interna- lined communication and coordination procedures during tional shipping for containerized or break-bulk cargoes situations that affect shared waterways. The Domestic of higher value, and are offered on specific trade routes Ferries Security Regulations also came into force in 2009 under a published schedule. Non-liner services do not to increase the level of protection for 18 domestic ferry have a fixed schedule and are operated on any ship- routes and 29 ferry facilities across Canada. These reg- ping lane, carrying specific commodities (such as grain ulations provide a framework to detect security threats and crude oil). The Shipping Conference Exemption and to take measures to prevent security incidents that Act provides an exemption from certain provisions of could affect domestic ferries and their facilities. the Competition Act. There are no conferences serving east coast ports and have not been since 2008, when In 2010, the Small Vessel and Facility Security the European Union (EU) made conference agreements initiative launched several workshops for regional law illegal for all carriers serving the EU trade. enforcement—including one in Toronto. That same year, Transport Canada and the Canada–Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) signed Cruise ship industry a Memorandum of Understanding to foster greater coordination and collaboration and allow operators to Cruises visiting or departing from Canada are offered use a single set of marine security-related requirements on both coasts and on the St. Lawrence from April in order to meet both Transport Canada and C-NLOPB through October. Cruises on the east coast offer itin- marine security requirements. eraries that combine Canada and New England states, with most departing from or visiting Montreal, Québec Transport Canada took measures to help ensure trans- City, Halifax, Charlottetown or Saint John. Cruises on portation security during major events hosted in Canada, the Pacific coast visit or depart from Vancouver or visit such as the 2010 G20 summit in Toronto and the 2010 Victoria, with most sailings visiting Alaska. In 2011, the Winter Olympics and Paralympics held in British Columbia. Port of Vancouver benefitted from 199 sailings from Transport Canada’s role in these types of events is to pro- 27 vessels, and more than 663,000 revenue passengers vide additional security assessments, establish measures (see Table M21). The port of Montreal had more than for security zones, if required, and provide personnel for 38,000 international cruise ship passengers on 22 vessels. the respective joint operations centres. In Québec City, 20 ships from 16 different cruise lines brought more than 83,000 passengers. In Halifax, 122 Over a three-year period, Maritime Commerce cruise ship vessels brought more than 240,000 people Resilience projects were completed in the ports of to visit the city. Vancouver, Halifax, Hamilton and Montreal. The projects aimed to prepare the maritime community and government officials to coordinate and execute a swift, Canada Port Authorities (CPA) effective recovery in the event of man-made or natural disasters that significantly disrupt maritime commerce. The Canada Marine Act enacted in 1998 created a national system of ports vital to domestic and international trade. The 17 CPAs (18 since the inclusion of the 7.4 Economic Framework Port of Oshawa in February 2012) are authorized under their Letters Patent to manage and operate specific and Infrastructure ports at arm’s-length from the federal government on a commercial basis, and are financially self-sufficient. International shipping A recent study estimated that CPAs contribute about Canada is situated along numerous international $24.5 billion to the Canadian gross domestic product shipping routes that link North America with other and provide almost 269,000 jobs (in full-time equivalent person-years).11

11 CPCS Transcom Ltd. for the Association of Canadian Port Authorities (June 2011). Canada Port Authority Infrastructure Study.

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CPAs play a critical role in supporting Canada’s gate- • At the Port of Hamilton, Richardson International has ways and trade corridors, as they are often the entry and invested $5.5 million to expand its port terminal facility exit points into and out of Canada and handle the most to increase handling and shipping capacity.17 As well, significant share of Canadian trade (24% by volume) the Port of Hamilton completed road, rail, building when compared to other modes and non-CPA ports.12 and security improvements. New facilities by Parrish and Heimbecker as well as McAsphalt Industries have Canadian trade—both imports and exports—has been enabled bulk throughput capacity growth.18 steadily increasing since 1995.13 Increasingly, Canada’s major trade partners are located in Asia, prompting a • The Montreal Port Authority and Viterra Inc. announced shift in Canada’s trade orientation from east (Europe) to that Viterra has commenced operation of the Grain west (Asia–Pacific region). Growth in Asia is expected Terminal previously managed by the Montreal Port to continue, which places increasing pressures on west Authority.19 As well, on February 3, 2011, the Montreal coast ports (and on east coast ports for Asian cargo Port Authority and Canadian National signed an moving via the Suez and Panama canals).14 agreement to improve supply chain efficiencies for container traffic.20 The increasing competitiveness of U.S. and Mexican ports and gateways is another important consideration for • At the Port of Trois-Rivières, Phase 1 of On Course Canadian ports. American ports as well as inland transpor- for 2020—the program to modernize the CPA’s facilitation corridors have seen significant investment in recent ties—was launched on May 19, 2011. Over the year years. The resulting increases in capacity and efficiency that followed, 26,000 square metres of additional out- have challenged the competitiveness of Canadian ports door storage was created, two new warehouses were and supply chains, particularly for traffic destined for the built, road access was improved, and port boundaries U.S. Midwest and North American heartland.15 were properly defined to increase safety, security and productivity. Overall, this work has increased the port’s By working in partnership with other transportation capacity by 22%.21 stakeholders, CPAs have remained competitive despite the recent global economic crisis. As well, CPAs have • Using a $30-million investment under the federal expanded their holdings and activities in response to Infrastructure Stimulus Fund, the Sept-Îles Port commercial demands, undertaken capital projects to Authority leveraged more than $250 million of private modernize and add to Canada’s marine transporta- sector investment in the natural resource sector in the tion infrastructure, and pursued business opportunities North Shore of Quebec.22 with various shippers and marine terminal operators. Shippers, marine operators and terminal operators have • At the Port of Saint John, the $30-million expan- also invested in Canada’s national port system through sion of American Iron & Metal (AIM) operations on the construction of new marine terminals and the instal- the port’s west side continued with a signed 40-year 23 lation of new equipment. For example, in 2011: lease agreement. As well, in 2011 the port welcomed cruise ships from two lines that have not previously • At Vancouver, Neptune Bulk Terminals (Canada) Ltd. docked in the city: MSC Cruises and Oceania Cruises. (Neptune) has invested $63.5 million in new equipment Estimates for 2011 calculate that more than 70 ships to improve its terminal coal handling capacity, opti- docked in Saint John, bringing in more than 200,000 mize energy efficiency, and enhance its environmental passengers and close to 70,000 crew members.24 performance at its North Vancouver facility. Neptune will also purchase and install a new $45-million stacker/reclaimer, manufactured in British Columbia.16

12 CPCS Transcom Ltd. for the Association of Canadian Port Authorities (June 2011). Canada Port Authority Infrastructure Study. 13 CPCS Transcom Ltd. for the Association of Canadian Port Authorities (June 2011). Canada Port Authority Infrastructure Study. 14 CPCS Transcom Ltd. for the Association of Canadian Port Authorities (June 2011). Canada Port Authority Infrastructure Study. 15 CPCS Transcom Ltd. for the Association of Canadian Port Authorities (June 2011). Canada Port Authority Infrastructure Study. 16 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011). 17 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 4, Autumn 2011). 18 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011). 19 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 4, Autumn 2011). 20 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011). 21 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011). 22 Association of Canadian Port Authorities. 2010. Canadian Ports Magazine. 23 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011). 24 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011).

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• At the Port of Halifax, American Feeder Lines announced the fishing industry open and in good repair. Over time, the launch of a new feeder service between Halifax, the objective is to retain a network of approximately 750 Portland (Maine) and Boston (Massachusetts).25 core, locally managed fishing harbours. All non-core harbours (i.e. recreational harbours and fishing harbours with low or no activity) are planned for divestiture. St. Lawrence and

Great Lakes Seaway Fishing harbours

Pursuant to the Canada Marine Act (CMA), the St. In the late 1980s the Harbour Authority concept was Lawrence Seaway was commercialized in 1998, with introduced, which devolved responsibility for day-to- its operation transferred to the St. Lawrence Seaway day management and operation of core commercial Management Corporation (SLSMC), a not-for-profit fishing harbours to local, not-for-profit, incorporated corporation established by Seaway users and other entities—called Harbour Authorities—controlled by interested parties. Under a 20-year agreement with the local harbour users and operating under lease agree- federal government—in force until March 31, 2018—the ments with DFO. As of December 31, 2011, Harbour SLSMC manages and operates the Seaway and main- Authorities managed 684 core fishing harbours across tains, repairs, acquires and replaces Seaway assets, Canada, about 91% of the SCH Program target. Non- of which the federal government retains ownership. core fishing harbours (i.e. those with low or no activity) The SLSMC is authorized to charge tolls and generate were targeted for divestiture further to Program Review other revenues to finance its activities, and is allowed to decisions in the mid-1990s. These divestitures have had recover funds from the federal government to eliminate minimal impact on the commercial fishing industry and annual deficits. The CMA established a statutory appro- continue to be operated according to their original pur- priation for this purpose. pose; they are also kept safe and publicly accessible for In 2010–11, the SLSMC’s total revenue increased at least five years. To date, 377 fishing harbours have by 19.4% to $66.0 million, compared to the previous been divested. year’s total of $55.2 million (see Table M14). Operating expenses for 2010–11 relating to the management Recreational harbours and operation of the Seaway infrastructure amounted to $67.0 million, an increase of 3.1% from the previ- Over time, the SCH Program intends to divest all ous year. Asset renewal expenditures, representing recreational harbours in its inventory. Since 1994–95, the cost of maintenance and major repairs of locks, 690 (or 82%) of SCH recreational harbours have been canals, bridges, buildings and other infrastructure divested. The SCH disposal strategy, approved by assets excluding capital acquisitions, totalled $49.3 mil- Treasury Board in 1995, permits disposals at a con- lion for 2010–11, compared to $45.2 million in 2009–10 sideration of $1.00, subject to conditions including a As for transiting tonnage, 2011 saw a 2.5% increase in requirement to maintain public access for at least five volumes to reach 37.5 Mt (see Table M19). years. Prior to transfer, where a harbour must first be refurbished, SCH is authorized to make reasonable repairs and conduct environmental clean-up or pro- Small Craft Harbours Program at vide an equivalent financial incentive under the SCH Fisheries and Oceans Canada Divestiture Grant Program to recipients. This is to facilitate harbour disposal and ensure that facilities are There were 923 small craft harbours and fishing harbours transferred in a safe condition. Recipients are mainly in Canada at the end of 2011 (see Table M2). Within municipalities, local non-profit organizations, First Fisheries and Oceans Canada (DFO), the Small Craft Nations or other federal departments. In the absence Harbours (SCH) Program operates and maintains a of an interested public body, the facilities are offered at national system of harbours to provide commercial fish- market value to the general public. As a last resort, if ers and recreational boaters with safe and accessible neither public nor private interest in the facilities exists, facilities. SCH’s mandate is to keep harbours critical to they are demolished. Tables M3 to M5 summarize,

25 Association of Canadian Port Authorities. 2011. ACPA Manifest (Volume 8, No. 3, Summer 2011).

2011Transportation in Canada 63 7 Marine Transportation by region, the status of the SCH recreational harbour divided into segments based on vessel size and trade divestiture program, the recipients of harbours divested route served. Indices unique to each market segment and the type of management of the remaining harbour track freight rates, or prices charged by ocean carriers, sites in the SCH inventory. and generally reflect the balance between demand for the goods being carried and supply of ships available to carry them. However, the freight rate is rarely an all-inclusive nternational shipping in anada I C price and is subject to various fees and surcharges. While land transport dominates Canada–U.S. trade, Freight rate indices generally trended upward in the Canada relies heavily on a competitive international period immediately preceding the 2008 global financial shipping industry to transport its trade with countries crisis, and then collapsed in the fourth quarter of 2008. other than the United States. Every year, ships regis- Indices saw modest gains in 2009 as recovery took tered in foreign countries carry approximately 99.9% hold, with relatively stable prices through much of 2010. of Canada’s deep-sea (non-U.S.) cargo. As Canadians However, 2011 has generally shown mixed results, with increasingly seek trading opportunities beyond the some shipping markets experiencing declines in freight traditional U.S. market—particularly with newly emerg- rates due to oversupply of ships, despite industry efforts ing economies—Canada’s reliance on international to reduce supply even as demand for cargo continued to shipping markets may affect the make-up of the foreign increase, albeit at levels well below 2008 peak demand. partners with which it trades, as reliance on international shipping markets (i.e., foreign-owned and registered Ocean shipping costs in the dry bulk sector play a shipping) may facilitate or present a barrier to diversi- pivotal role in the success of Canada’s resource exports. fying Canada’s international trade. Dependency on the The Baltic Exchange Dry Bulk Index, a measure of international market runs the risk of a shortage of ships charter costs for classes of dry bulk ships, hit a high or sudden spikes in freight or charter rates, which affect of 11,459 points in the second quarter of 2008 before the cost of getting Canada’s goods to market and the plummeting to a low of 666 points in the fourth quarter country’s competitiveness against other suppliers that of 2008. The index recovered to a high of 4,291 points own a greater portion of their shipping/logistics chains. and then hovered from 2,163 to 4,643 points through to the third quarter of 2010. The index started 2011 at International shipping is essentially comprised of 1,621 points and closed the year at 1,738 points. three cargo-based markets: dry bulk shipping; tanker or liquid bulk shipping (tanker market); and container Tanker charter costs affect the profitability of shipping (liner shipping market). Each market is further Canada’s exports and imports of crude petroleum and refined products. Tanker charter costs declined by roughly 50% in 2009 from their most recent peak levels in 2008, and continued to decline into 2011. According Moving low value, resource to Fearnleys, an international shipping consultant, the COMMODITIES FROM THE PRAIRIES TO MARKET average time charter rate for a modern Very Large Crude Container availability in the Prairie provinces is a function of ship- Carrier (VLCC) declined from an average daily rate of ping line profitability. Shippers in the Prairie provinces are often U.S.$90,000 in July 2008 down to $18,000 in September challenged to attract a sufficient number of empty containers to 2011. VLCCs are tanker ships of 200,000–350,000 move their goods to market. deadweight tonnage (DWT—where DWT is a measure The most important factor driving apparent container shortages in of the total weight a ship can safely carry) that generally these provinces is the low potential profit available to shipping lines. carry only crude oil. Similarly for clean product tankers, Most of the exports produced in the Prairie provinces are resource Fearnleys data show that average daily charter rates for commodities that are low value relative to their weight and volume. This low value limits exporters’ ability to absorb higher transpor- an 80,000 DWT tanker peaked at $30,500 in October tation costs. During times of congestion, shipping lines have the 2008 and fell to $14,625 by September 2011. financial incentive to focus on providing transportation services to those shippers able to pay more for container availability. Canada’s domestic shipping industry Container shortages in the Prairie provinces can also occur when demand is insufficient to support balanced traffic flows. This can For Canada’s large commercial vessels, 2011 saw posi- occur when the number of loaded containers imported into a com- tive outcomes stemming from a culmination of many munity is insufficient to meet the demand of local exporters hoping to use these containers to move their goods to market. To bridge the efforts and events throughout the previous four-year gap between demand and supply, containers have to be repositioned period. Of particular interest was the gradual renewing from other locations where there is a surplus of empty containers. of part of Canada’s ageing fleet of commercial and government vessels.

64 Transportation2011 in Canada Marine Transportation 7

In previous years, renewal of commercial vessels had In addition, there are a number of privately and been impeded by numerous factors such as costs and publicly owned intra-provincial, inter-provincial and duties. The situation changed considerably in 2010 as the Canada–U.S. ferry operations serving Canada as shown global economic downturn led to cancelled ship orders in Table M17, including: and competitive shipbuilding prices, a strong Canadian dollar, low interest rates, and decreased steel prices. In • BC Ferries, a former Crown corporation commercialized addition, the Government of Canada waived the 25% in 2003, is the largest passenger ferry line in North tariff on certain foreign-built vessels. Together, these fac- America and one of the largest in the world. With a tors have encouraged and accelerated the replacement fleet of 35 vessels, it operates on 25 routes, serving of Canada’s ageing vessels with cleaner, safer and more 47 terminals and provides all major passenger and efficient vessels, often with greater capacity. vehicle services on the west coast, carrying travellers between mainland British Columbia and Vancouver As a result, 2011 was a strong year in terms of new Island as well as other islands (e.g., the Gulf Islands Canadian vessels entering into service, with more addi- and the Queen Charlotte Islands) along the coast of tions to the Canadian fleet expected in the years to British Columbia. come. This, in turn, is resulting in social, environmental and economic benefits for Canada and its people, while • Black Ball Ferry Line provides year-round daily ferry positioning the country’s marine transportation system service linking Victoria with Port Angeles, Washington. to be more competitive and sustainable. • The Yukon, the Northwest Territories and the Prairie It should be noted that foreign participation in provinces all operate ferries as part of their highway Canada’s coasting trade has remained low, ranging network; these services cross small bodies of water. from a low of 1.2% to a high of 11.1% of total ton- • Washington State Ferries offers daily spring to fall ser- nage carried between 2000 and 2010. The majority of vice between Sidney, British Columbia, the San Juan vessels temporarily imported under a coasting trade Islands and Anacortes, Washington. licence are tankers and special-purpose vessels for offshore activities. Some cargo vessels are also imported • Société des traversiers du Quebec (STQ), a Quebec temporarily for use in the east coast (Atlantic and Crown corporation, operates five ferry services on the St. Lawrence Seaway regions). St. Lawrence and Saguenay rivers with a fleet of 12 ships. • Compagnie de Gestion de Matane (COGEMA), a Ferry services Canadian National Railway (CN) subsidiary, operates the only rail ferry in Canada, between the Quebec A ferry is defined as a boat or ship that carries passen- ports of Baie-Comeau and Matane, with possible gers, vehicles or cargo across water. Ferry services are freight interchange with CN at Rivière-du-Loup. offered on regular, frequent and return basis. Ferries represent a form of transportation and are part of the • Relais Nordik, a service offered by the Desgagnes transport system for many waterside cities and islands. Group from April to January, links Rimouski and Sept- In Canada, ferry service offerings are not limited to Îles with 10 villages on the Lower North Shore of provinces and territories with large lakes and lengths Anticosti Island, between Havre St-Pierre and Blanc of shoreline. Most provinces propose seasonal ferry Sablon. Seven of these villages have no road access. services in their regions, as ferries permit point-to-point • Coastal Transport Limited, based in Saint John, transit at much lower capital costs than bridges or tun- New Brunswick, offers daily ferry trips to Grand Manan nels. Many cable ferries are operated on lakes and rivers Island from the ferry terminal in Blacks Harbour, in Canada. New Brunswick. Marine Atlantic, a Crown corporation, offers commercial • C.T.M.A. Traversier Ltée, a division of CTMA Group, and passenger ferry services between the provinces of operates a passenger and vehicle ferry service between Newfoundland and Labrador and Nova Scotia. It operates Cap-aux-Meules, Îles-de-la-Madeleine, Quebec and a year-round, constitutionally mandated service between Souris, Prince Edward Island between April and Port-aux-Basques, Newfoundland and Labrador and January, as well as a reduced winter ferry service in North Sydney, Nova Scotia and a seasonal, non- February and March. The federal government has constitutionally mandated service between Argentia, provided financial support for this service since 1971 Newfoundland and Labrador and North Sydney. towards operating deficits as well as to cover the cost of maintenance and repairing Transport Canada’s assets used in the delivery of this ferry service (one vessel and two terminal facilities).

2011Transportation in Canada 65 7 Marine Transportation

• Bay Ferries Limited operates a passenger and vehicle • Translink, which operates SeaBus ferries between ferry service between Saint John, New Brunswick public transit bus hubs at Lonsdale Quay in North and Digby, Nova Scotia, using a Transport Canada- Vancouver and Waterfront in Vancouver, where com- owned vessel and two terminal facilities. The operator muters can connect with the Skytrain or the West receives funding from the federal government toward Coast Express commuter rail; and, operating deficits as well as to cover the cost of maintenance and repairs of Transport Canada’s assets • Aquabus Ferries Ltd operates a small, water-taxi used in the delivery of this ferry service. like service serving eight locations on Vancouver’s False Creek. Its 12-passenger ferries are the smallest • Northumberland Ferries Limited operates a passen- in Canada. ger and vehicle ferry service between Wood Islands, Prince Edward Island and Caribou, Nova Scotia, using ccessibility and ferry services Transport Canada-owned ferry terminal facilities and A two vessels, for eight months of the year (May to The Terminal Code of Compliance is a code of best December). The federal government has been provid- practices in accessible transportation applicable to air- ing financial support for this service since 1941. port terminals and some rail and ferry terminals, mainly • Labrador Marine operates a wintertime ferry service those under federal jurisdiction. In the Terminal Code between Corner Brook, Newfoundland and Labrador Compliance Report of 2010, the Canadian Transportation and Blanc Sablon, Quebec to complement its Agency reported that, as it applies to ferry terminals, 10-month service between St. Barbe, Newfoundland both Marine Atlantic Inc. and Northumberland and Bay and Labrador and Blanc-Sablon. The Corner Brook– Ferries have achieved full compliance. Non-federally Blanc Sablon service became a permanent year-round regulated ferry services may have also achieved a level service after the successful completion of pilot proj- of accessibility in compliance with the Code, but these ects in 2010 and 2011, as well as a $1.3-million were not assessed. Ferry operators voluntarily offer free contribution from the Government of Newfoundland attendant fare for daily, but not overnight, passage. and Labrador. The Quebec Société des traversiers continues to work Numerous inter-provincial ferry and coastal services on recommendations emanating from the Kéroul Report are operated along Canada’s east coast. Provinces of 2007 and is looking at improving how its Quebec- offer intra-provincial ferry services; some operate these Levis ferry connects with Paratransit in Québec City. as components of their highway networks (i.e., as links within their highway systems). Intra-provincial ferries that are river crossings are affected by fluctuating water Accessibility at Marine Atlantic levels. The provinces of New Brunswick, Manitoba, Prior to going into service in March 2011, Marine Atlantic’s two Saskatchewan, Alberta and both the Northwest and newest vessels, MV Blue Puttees and MV Highlanders, were modi- Yukon Territories do not charge a fee on ferries they fied to add adapted cabins, tactile signage, audible notification of operate (with one exception: the Wollaston ferry service deck level in elevators and visual alarms. in Saskatchewan) nor does British Columbia for inland ferry services that are designated as part of its highway network. All other provincially operated ferry services do charge a fee. Shortsea shipping in Quebec Finally, several ferries are used as extensions of public Shortsea shipping—the movement of cargo and transit in major cities, such as: passengers by sea but without directly crossing an • Metro Transit in Halifax, used between terminals in ocean—from a sustainable development perspec- downtown Halifax, Dartmouth and Woodside to ease tive, can contribute to improving air quality, lighten traffic on bridges; road traffic congestion and cut down on noise pollution. Quebec’s Shortsea Shipping Roundtable aims to • Quebec-Levis ferry in Québec City, operated by the promote marine transportation within the province and Société des traversiers du Quebec; between Quebec and the rest of North America. The • Toronto Island Ferry, which runs routes to Hanlan province plans to act as a clearinghouse for information Point, Ward’s Island and Centre Island from the dock and expertise, and to promote the integration of mari- at Bay Street and Queen’s Quay; time transport in domestic and continental transport

66 Transportation2011 in Canada Marine Transportation 7

lines. This roundtable deals with the transport of both 7.5 Environment goods and passengers. Shortsea shipping services in Quebec include the operation of public and private ferries, the provision of maritime services to isolated Canada’s environmental role at the communities, the inter-regional maritime movement of International Maritime Organization petroleum, oils and lubricants, the delivery of de-icing salt, and new multi-modal services. (IMO) An example of this type of service is when Groupe Canada joined Norway and other countries at the IMO Océan transported woodchips by barge along the in July 2011 to bring about the first international stan- North Shore to the Kruger paper mill establishment in dards for energy efficiency that aim to reduce GHG Trois-Rivières between April 2005 and June 2007. This emissions from the shipping industry. Beginning in initiative permitted the elimination of 18,000 heavy- 2013, new ships will be assigned a measure of carbon truck trips per year along highways 138 and 40. It also efficiency—the Energy Efficiency Design Index (EEDI), resulted in decreased use of the ferry running between which includes target efficiencies for new ships. All Baie- Sainte-Catherine and Tadoussac. This transpor- ships will also be required to have a Shipboard Energy tation operation replaced trucking for nine months a Efficiency Management plan onboard that outlines year, until the closure of the Ragueneau and Forestville actions a ship is taking to increase its energy efficiency. Kruger sawmills in the summer of 2007. Through this Canada contributed funding towards a study commis- initiative, the Kruger company reduced its transporta- sioned by the IMO Secretariat to examine market-based tion costs, an estimated $350,000 was saved per year measures to encourage reductions in GHG emissions in road surface maintenance costs, and GHG emissions that are currently under consideration for the shipping were reduced by 9,000 tonnes per year. The initiative industry. Canada has been a leader in developing inter- also decreased road hazards, given the decline in the national measures to control the movement of aquatic number of required heavy-truck trips. invasive species from ships’ ballast water. Canada also played a key role in IMO’s Expert Group on Market- For nearly a year, the St. Lawrence Ship Operators, in Based Measures and participated in discussions that cooperation with Transports Quebec and Hydro-Quebec, led to the adoption of new IMO standards for ships headed a feasibility study on shipping goods to the major to manage garbage and nutrients that may be present North Shore shipyards. Diverting a portion of transport in sewage. from door-to-door trucking to a truck-ship-truck solution proved beneficial—and a realistic option from technical, logistical, economic and social perspectives. The Air pollution study’s final report presents a concrete business case for implementing maritime transport services to the North Emission Control Area Shore region through a third-party logistics company, bringing together several ship operators and a partner In March 2009, Canada and the U.S., with support from trucking company. However, a number of logistic, eco- France on behalf of Saint Pierre and Miquelon, sub- nomic and social challenges remain, including industry mitted a joint proposal to the International Maritime leadership and cooperation among various modes of Organization for the establishment of an Emission transportation. The introduction of financial incentives Control Area (ECA) on the east and west coasts. may incite private investment, which could make shortsea shipping a viable long-term solution for Quebec. In March 2010, the Parties to International Convention for the Prevention of Pollution from Ships Annex VI Across the country, a number of other shortsea (MARPOL Annex VI) voted to adopt the North American shipping activities are taking place, particularly in the ECA. The ECA is the largest of its kind, spanning from St. Lawrence and Great Lakes Seaway, off the coast of the baselines of the territorial sea, south of 60° north lat- British Columbia and in the North. itude, out to the 200 nautical mile limit of the Exclusive Economic Zone. The ECA sets new emission standards to reduce ships’ air emissions, enhance environmental protection and provide substantial benefits to human health. Effective August 1, 2012, sulphur content in marine fuels will be limited to 1% and to 0.1% after 2015, thereby delivering a 96% reduction of sulphur oxide emissions from ships.

2011Transportation in Canada 67 7 Marine Transportation

Alternatively, ships may use emission control systems arrangements with partners (e.g. utilities, provincial that deliver equivalent performance and continue to and/or municipal governments) governing access to burn higher-sulphur fuels. Ship engines built after 2016 city electrical grids and power lines. Additionally, the will also be subject to enhanced emission controls for benefits of shore power are shared among many stake- nitrogen oxides. These regulations are expected to help holders, making the business case for investment by the reduce air pollution, smog and acid rain and benefit port challenging. human health in coastal areas as well as further inland. To bring the ECA into effect, Transport Canada is devel- The federal government’s Shore Power Technology oping regulations under the Canada Shipping Act, 2001, for Ports program was designed to mitigate barriers which are expected to be in force by the fall of 2012. to adoption of marine shore power technology facing Canadian port stakeholders. The program is aimed pri- Transport Canada has committed funding on research marily at Canadian port authorities, but any stakeholder and development projects that facilitate marine emis- can build a business case and submit an application. sions reductions of both GHG and air pollutants. These initiatives align with the IMO MARPOL Annex VI and the Port emissions adoption of the North American Emission Control area. They also support the development of standards and The National Port Inventory project will result in a best practices to further reduce marine air emissions. detailed, activity-based inventory of air emissions associated with both marine and land-based port-related Great Lakes requirements for operations for all 17 CPAs. This includes a GHG and CAC emissions assessment related to the use or activ- low-sulphur fuel ity of all equipment from four major source groups Transport Canada is developing air emissions regulations comprising marine vessels, cargo handling equipment under the Canada Shipping Act, 2001 for commercial (CHE), rail locomotives and motor carriers. The inven- marine vessels operating on internal waters of the Great tory will include the activities throughout the entire Port Lakes and Saint Lawrence Seaway system. Under the jurisdiction of the designated Canadian Port Authorities proposed approach, Canadian shipowners must meet (CPA), including: a gradually decreasing sulphur content in fuel used on • A detailed inventory of emissions in 2010 associated average across their fleet, from 2012 to 2019. These with CPA’s marine and landside operations regulations are being advanced as industry makes efforts to renew and modernize Canada’s domestic • Quantification of emission reduction measures cur- fleet. Starting in 2020, individual vessels will be required rently in place and planned for the future to meet Emission Control Area level standards. The • Forecast of the 2010 emission inventory in five-year standards can be met by using low-sulphur distillate increments through 2025 (e.g. 2015, 2020 and 2025) fuels (such as marine diesel), alternative fuels (such as liquid natural gas), emission control technologies, Emissions will be compiled using Transport Canada’s on-board procedures, or a combination of these that Port Emissions Inventory Model (database tool) and achieves a performance equivalent to using fuel with Guide for inventories of CAC and GHG emissions in the prescribed sulphur content. These regulations are the ports. Results will be made public, and will allow expected to be released in coordination with the ECA. CPAs to show environmental leadership and reach a higher level of environmental performance. The subse- Marine shore power quent data analyses and model development outputs from this project available will allow Transport Canada Marine shore power is a technology that allows ships to better inform discussions related to the policies and to plug into the local electrical grid to power their ves- legislation aimed at reducing energy use and emissions sels while at port, thereby avoiding the use of auxiliary related to marine transportation, including providing an engines that consume fuel and produce GHG and air emission baseline for the Marine Shore Power Program. pollutant emissions. A similar approach in 2009 focused on the port of Canadian ports face barriers to adoption of this Montreal showed that marine vessels had the most fuel technology, including the initial capital cost of these consumption, with 24.8 million litres, followed by CHE at installations, the lack of Canadian experience with 7.1 million litres. The report26 also showed the emission this technology, and the complexity of contractual levels of 10 air contaminants by source.

26 See http://www.tc.gc.ca/media/documents/Quebec-eng/rapport_emission_mtl_e.pdf

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either have met the regulatory requirements or take EcoAction Program at Port of Metro corrective action to meet these standards. Scientific Vancouver (PMV) research has demonstrated the effectiveness of this program, and in fact recommended it for other fresh- PMV’s EcoAction Program promotes attainable emissions reduc- water ecosystems around the world. No new non-native tion goals for ocean-going vessels that enter the Port, and rewards those who excel in environmental stewardship. species attributed to ships’ ballast water has been reported on the Great Lakes since 2006, which demon- Vessels may qualify for one of three levels of harbor due rates based strates the effectiveness of the regulations and the joint on implementing one of the emission reduction options within a given category. The reduced rates, Bronze, Silver and Gold, are enforcement program. designed to provide a wide variety of technology and fuel options to In light of the patchwork of regulations described in vessels in order to promote and build awareness around a number of alternative emission reduction practices. section 7.3, Transport Canada has also been working closely with U.S. state and federal agencies to encour- As acknowledgement of and encouragement to shipping partners age uniform, science-based rules for managing ballast who advance the goal of bringing cleaner ships to Vancouver, the Port has introduced the newly established Blue Circle Award for water to protect shared waters while providing a pre- participants in its EcoAction Program for Shipping, a recognition dictable regulatory regime for marine shipping. reserved for only the highest emissions reduction achievements. More information is available at: http://www.portmetrovancouver. National Aerial Surveillance Program com/en/environment/initiatives/Air/EcoAction.aspx Transport Canada monitors ships transiting Canadian waters through its National Aerial Surveillance Program (NASP). The NASP conducts over-flights of vessels Water pollution moving through Canadian waters on a routine basis. During these flyovers, crew members inspect vessels Ballast water and their wakes for signs of potential pollution or other violations of the Canadian Shipping Act, 2001. In 2010–11, The Government of Canada is committed to reducing some 12,365 vessels were flown over during 2,506 the risk of aquatic species invasions from ships’ ballast patrol hours of surveillance (see Table EN7). Of these, water. This environmental concern is particularly pro- 84 pollution incidents were detected. nounced on the Great Lakes and St. Lawrence Seaway system, which serves as a critical transportation cor- The NASP has become a world leader in marine aerial ridor for commodities such as iron ore, coal, minerals reconnaissance. It has finalized upgrades to surveil- and grain. Accordingly, Canada has developed strong lance equipment onboard all three aircraft used in this and effective ballast water regulations that recognize program and enables the use of live streaming video. both the environmental and economic importance of This will allow aircrews to link people on the ground with these waters. Recognition that strong international events being monitored by aircrews in real time. rules are also needed to regulate the global fleet that carries North America’s trade led to Canada’s April Initiatives to contain maritime pollution 2010 ratification of the International Convention for the Control and Management of Ships’ Ballast Water and In 2010, the federal Commissioner of the Environment Sediments, 2004. This convention requires vessels to and Sustainable Development (CESD) tabled a report to be equipped with treatment systems that effectively, the House of Commons concerning the federal govern- reliably, and dramatically remove live organisms from ment’s management of oil and chemical spills from ships ballast water under the challenging conditions found on in Canadian waters and, more specifically, its state of active vessels. preparedness to respond to such spills. In response to the report, key federal departments involved in marine In November 2010, Transport Canada published the emergency prevention and response activities created Ballast Water Control and Management Regulations the Inter-departmental Marine Pollution Committee. under the Canada Shipping Act, 2001. Today, all ves- Several sub-committees were also formed to address sels entering the St. Lawrence Seaway from outside key recommendations, including a sub-committee on Canada’s exclusive economic zone are inspected under the management of hazardous and noxious substances a Canada–U.S. program before they enter the Great as well as another on policy and legislation—both of Lakes. This enforcement action ensures full compliance which are chaired by Transport Canada. with exchange and flushing requirements, as ships must

2011Transportation in Canada 69 7 Marine Transportation

Transport Canada is working with key federal depart- accidents and accidents aboard ships. In 2011, the ments and agencies to ensure that adequate, up-to-date steady downward trend continued with 274 reported data on the movement of hazardous and noxious accidents (247 shipping accidents and 27 accidents substances by ships is available. This, in turn, will aboard ship). This 2011 accident figure represents a 7.7% support the development of a national hazardous decline from 2010 (297), and was 24.1% lower than the and noxious substances ship-source preparedness 2006–2010 five-year average. Please see Tables S1, S14 and response regime. National consultations will lead and S15. to the design of the proposed regime and to recommendations for the adoption of the IMO’s Protocol on There were 11 fatal Canadian vessel accidents resulting Preparedness, Response and Co-operation to Pollution in 12 fatalities in 2011, a decrease compared to the pre- Incidents by Hazardous and Noxious Substances (OPRC- vious five-year average of 17 fatalities. The majority of HNS Protocol). fatalities in 2011 (75%) resulted from accidents aboard ship, which included persons falling overboard. Another initiative underway is the Ice Navigation and Oil Detection Radar project, which will significantly Of the 274 Canadian vessels involved in shipping enhance the ability to detect and track ice, oil and other accidents in 2011, fishing vessels represented nearly targets using radar from both shipboard and fixed plat- 43%, while all other non-pleasure craft accounted for forms. This technology will provide a unique capability almost 53% (see Table S16 and S17). Pleasure craft in Arctic waters to improve the safety and the fuel effi- comprised the remaining 4%, and these accidents ciency of ships operating in a challenging environment, are recorded when involved with non-pleasure craft or thus reducing their emissions. In addition, it assists when engaged in a commercial activity at the time of the in oil spill clean-up and enhances search and rescue occurrence (e.g., charters). response capabilities. Based on forecast movement data, the 2011 Canadian vessel accident rate of 19.5 (available only for non-pleasure craft—excluding fishing—of over 15 gross 7.6 Safety tonnes) has increased from the 2010 rate of 18.0 but Qualified, well-trained seafarers are critical to safe remained below the previous five-year average (20.7). marine operations. Currently, approximately 30,000 Some 22 Canadian vessels confirmed total losses valid certificates have been issued by Transport Canada due to a shipping accident in 2011, down 27.2% from to seafarers who work in Canada. This includes 9,681 the previous five-year average of 30.2%. The greatest examinations conducted in 2011 to ensure nautical proportion of losses in 2011 was found in fishing ves- officers, marine engineers and other disciplines are sels, at 95.5%. competent to carry out their required duties (see Table M31). Foreign flag vessels A well-maintained domestic vessel fleet is also essential for safe marine operations. For large In 2011, 48 accidents occurred that solely involved one vessels (greater than 15 gross tons), 54 types of vessel- or more foreign flag vessels—down from the previous specific certificates exist—the majority of which directly five-year average of 59.2. These accidents resulted in support safe operations, while the remainder encour- three fatalities and no confirmed vessel losses. For more age protection of the environment. Each certificate is details on marine accidents, including a regional break- time-based and requires inspection of the vessel by a down of occurrences, see Tables S14 to S17. Marine Inspector or recognized organization in order to be issued or maintained. Transport Canada conducts Recreational boats inspections and issues over 5,500 certificates per year. Boating is by far the most frequent type of activity leading to water-related injury and fatality in Canada, Safety statistics accounting for more than 3,000 deaths in Canada from 1991 to 2008. In 86% of the cases, the boating activity Canadian registered vessels was recreational and 95% of the deaths resulted from immersion including drowning, with or without cold The past two decades have witnessed an average exposure. For recreational boating, deaths associated yearly decline of 5% in recorded marine accidents with powerboats accounted for 58% of deaths and involving Canadian registered vessels as shown in Table unpowered boats for 37%. The most frequent recre- S14. Marine accident statistics include both shipping ational boating activity was fishing, accounting for 37%

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of immersion deaths. Males 15 and older accounted in, on, over, under, through or across navigable water in for about 90% of victims, continuing to make them Canada prior to construction. Additionally, the Navigable the key target group for prevention. Failure to wear a Waters Protection Program (NWPP) ensures that appro- flotation device was an equipment factor for up to 88% priate navigation safety measures such as warning of victims, and for an even higher proportion of non- lights, buoys or other markers are used and maintained swimmers and those who had consumed alcohol. during the construction and long-term operation of the Finally, a key environmental factor for recreational boat- approved works. Transport Canada is also responsible ing immersion deaths in Canada is cold water, which has for investigation and correction of obstructions to navi- been associated with at least 35% of fatalities.27 Figure gation caused by works or wrecked vessels. This can S17A shows annual recreational boating fatalities. include ordering the relocation, removal or alteration of an obstruction. At the owner’s expense, the program In 2011, more than 100,000 new applications and may also facilitate the relocation, removal or alteration transfers of licenses were issued from the Pleasure of the obstruction. Craft Licensing Centre in Fredericton, New Brunswick. It should be noted that Canada has approximately 6 mil- As the Receiver of Wreck, the NWPP acts as the lion recreational boaters in any given year. custodian of found and recovered wreckage while attempting to return the wreck to its proper owner. If an owner is not identified, the program may also determine nsuring safe navigation E a salvage award.

Marine pilotage Arctic navigation

Marine transportation personnel face serious navi- Global demand for raw materials, coupled with a contin- gational challenges every day: dangerous weather, ued decrease in Arctic sea ice during the summer melt treacherous tides and currents, underwater hazards, season and the resulting improved marine access, make congested waterways, and narrow channels. Opposite it highly plausible that Arctic marine activity will increase this list of hazards is the accumulated experience and in the future. Shipping associated with the anticipated knowledge of the marine pilot—mariners who use their expansion of resource development activities (hydro- knowledge of local waters to safely guide vessels to carbons, hard minerals and fisheries) and with regional their destinations. trade is of concern to Arctic residents due to its poten- All four Pilotage Authorities experienced a surplus tial for social, cultural and environmental impacts. in 2011, resulting in a combined gain of approximately Every year for the past five years—since the lowest- $10 million. Table M11 shows the non-audited financial ever summer-minimum Arctic ice coverage in 2007—one results of the four authorities in 2011. or more routes of Canada’s Northwest Passage has been Using the average number of assignments per pilot as ice-free for a period of time in the summer. Should sea an indicator, the overall efficiency of pilotage services ice reduction continue, open water itself may become in 2011 was slightly less than in 2010. Exceptions were a resource in terms of providing an efficient, seasonal, the APA, where the average number of assignments per and shorter global shipping route between major mar- pilot remained the same, and the LPA and GLPA, where kets in Europe, Asia and North America. the average slightly increased. Variations between the In 2009, Canada expanded the range of its Arctic authorities and from year to year are related to traffic waters pollution protection for ships to 200 miles—the levels. Table M16 shows the number of assignments for maximum permitted under international law. In 2010, it each pilotage authority as well as the total for all pilot- became mandatory for certain vessels to report before age authorities in 2011. entering and when operating in Canadian Arctic waters, to ensure safe and efficient navigation as well as protec- Navigable waters protection tion of the marine environment. A total 140 individual vessels reported to the Canadian Coast Guard Marine Through the administration of the Navigable Waters Communication and Traffic Services in 2010, and 135 Protection Act (NWPA), Transport Canada assists in vessels did so in 2011. Cruise ship traffic is relatively ensuring the public’s right to navigate Canada’s waters stable, at approximately 2,000 passengers on board without obstruction. It reviews and approves works built seven cruise ships making 11 trips a year.

27 Transport Canada and The Canadian Red Cross Society (2011). Boating Immersion and Trauma Deaths in Canada: 18 years of Research (1991–2008).

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Given the challenges of responding to shipping emer- for Canadian and U.S. manufacturers, improved effi- gencies in this vast, remote region, accident prevention ciencies in approval processes, and broader choices becomes a priority. Work is underway at the International for consumers. The new common standard is expected Maritime Organization to develop robust, mandatory to increase wearability and promote innovation in the international rules for polar shipping. Canada plans design of personal floatation devices. to harmonize its Arctic shipping rules, to the extent possible, with international requirements. Port State Control

Foreign vessels entering Canadian waters are boarded nternational standards I and inspected through the Port State Control (PSC) Program to ensure compliance with various inter- International Maritime Organization national conventions. PSC programs are regional in nature; countries sharing common waters have grouped The international nature of shipping and the vast number together under a Memorandum of Understanding of administrations involved around the world requires (MOU) to ensure that vessels trading in their area are international coordination in developing common safety not sub-standard. Canada is signatory to two MOUs: standards. This is undertaken by the International the Paris MOU, which is made up of 22 European Union Maritime Organization (IMO)—of which Canada is a countries and 5 non-European countries, and the Tokyo founding member—which helps shape requirements MOU, comprising 18 Asia–Pacific countries. Canada for all vessels around the world. The IMO is a United and the other member countries play significant roles in Nations Specialized Agency that governs the world’s the global elimination of sub-standard ships. Transport maritime shipping activities. Canadians benefit from Canada Marine Safety inspectors are trained based on IMO participation through enhanced marine transpor- international requirements to carry out inspections on tation systems at home; the Canadian marine industry high-risk ships that come to Canadian ports. gains by ensuring its voice is heard regarding requirements they must meet abroad. Transportation Safety Board

Harmonized work with the United States The Transportation Safety Board of Canada (TSB) is an independent agency created to advance transportation On February 4, 2011, Prime Minister Stephen Harper and safety through the investigation of occurrences in the President Barack Obama announced the creation of the marine, pipeline, rail and air modes of transportation. Canada–United States Regulatory Cooperation Council (RCC) to increase regulatory transparency and coordi- In 2010, the TSB released the TSB Watchlist, which nation between the two countries. The Joint Action Plan identifies safety issues investigated by the TSB that under the RCC aims to align recreational boat manu- pose the greatest risk to Canadians. The TSB Watchlist facturing standards and develop a proposal for aligning includes two main marine problems: the number of acci- monitoring and compliance regimes. For pleasure-craft dents involving loss of life on fishing vessels being too manufacturers, harmonized standards will simplify the high, and emergency preparedness on large passenger process of ensuring compliance to applicable standards ferries operating in Canada in need of improvement. for vessels that are exported. Harmonized standards Transport Canada considers these safety issues to be will help regulators (Transport Canada and the United a priority and is engaged in an expedited regulatory States Coast Guard) in compliance monitoring and will development process. This entails the development of facilitate collaboration to enforce similar requirements a project plan and process map for interim expedited and resolve potential non-compliance issues common responses to safety priorities and TSB recommenda- to both countries. tions, and engaging in web-based consultations on TSB Watchlist items. Regulatory misalignments do exist between the United States and Canadian standards for life jackets The Canadian Marine Advisory Council established and personal floatation devices. The Joint Action Plan a working group on marine TSB recommendations. aims to move to a common standard for life jackets, This working group, comprised of Transport Canada and considers developing mutual recognition arrange- and industry representatives, held its first meeting ments for other marine safety equipment. Benefits of at the November 2011 Canadian Marine Advisory mutual recognition include increased competitiveness Council meeting.

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7.7 Security Marine Transportation Security Regulations Canada enjoys one of the largest, safest and most secure marine transportation systems in the world. It is Canada’s Marine Transportation Security Regulations vital to the country’s prosperity, connecting Canada to (MTSR) came into effect on July 1, 2004 to implement the the international marine transportation system—and the International Maritime Organization’s (IMO) International global economy. Ship and Port Facility Security (ISPS) Code. The IMO The Marine Transportation Security Act aims to pro- created the ISPS code in response to the events of tect the country and its citizens from marine-related September 11, 2001 to set out a framework of security security risks in a way that respects Canadian values. measures to significantly enhance the deterrence, pre- Transport Canada is responsible for carrying out the Act, vention and detection of acts that threaten security in working with partners to increase the level of protection the marine transportation sector. The aim of the MTSR against unlawful interference, terrorist attacks, or from is to prevent unlawful interference with marine transpor- elements of Canada’s marine system being used as a tation in Canada and to ensure that appropriate action means to attack the country’s allies. Transport Canada is taken where that interference occurs or could occur. oversees marine security policy, regulatory affairs and Transport Canada has embarked on a long-term marine security operations and has functional authority project to amend the MTSR. The amendments focus over regional marine security operations. on responding to Canada’s obligation to implement new IMO requirements, further harmonizing with the Regulations and initiatives United States’ regulatory regime, reducing industry’s regulatory compliance and financial burdens, Interdepartmental Marine Security Working Group and addressing interpretation issues and regula- The Interdepartmental Marine Security Working Group tory gaps. Transport Canada held consultations with (IMSWG) was established in 2001 to ensure a whole- industry and other government departments across of-government approach to marine security. Chaired by the country from 2008 to late 2010. It is expected Transport Canada and comprising 17 federal depart- that the amendments package will come into effect in ments and agencies, the IMSWG coordinates federal late 2012. responses to marine security issues, analyzes Canada’s Improvements to the Transportation Security marine system for gaps, and addresses those gaps. The Clearance Program (security screening) IMSWG also oversees the Marine Security Coordination Fund that supports one-time or limited projects that The Marine Transportation Security Clearance Program contribute to the coordination of marine security efforts. (MTSCP) was introduced in December 2007. Its purpose is to reduce the risk of security threats by preventing In 2011, the IMSWG completed the Maritime Security unlawful interference with the marine transportation Strategic Framework—a reference point for all depart- system by requiring background checks on workers ments and agencies of the Government of Canada who perform certain duties or who have access to cer- with maritime security responsibilities. The Framework tain restricted areas—primarily those responsible for the communicates a common understanding of the threat integrity of major Canadian ports and marine facilities. environment and gaps in current capabilities. It also emphasizes collaborative solutions to marine security The MTSCP is not a new government program; rather, challenges by leveraging existing capabilities. Ongoing it is an extension of the existing Transportation Security and future efforts build on individual departments’ and Clearance Program that has been in place at airports agencies’ strengths and expertise to ensure efficient across Canada since the 1980s. It represents a risk- and effective use of available resources. management strategy of the Government of Canada to address the modern threat environment and protect The Framework highlights five security activities—Marine Canadians and their industries. Domain Awareness, Safeguarding, Responsiveness, Resilience, and Collaboration—through which current Supporting these security efforts, Transport Canada and future maritime security efforts are to be focused. It and the Royal Canadian Mounted Police signed an outlines specific action items and next steps in pursuit agreement in April 2009 on the sharing of sensitive law- of security related to Canada’s maritime domain. enforcement information, including details on organized crime and criminal association. This new information- sharing agreement enables transportation security

2011Transportation in Canada 73 7 Marine Transportation clearance decisions to be based on more complete data reduce marine security risks and achieve greater mari- from a broader range of intelligence sources. time domain awareness. These efforts contribute to the security, safety, and prosperity of Canadians and the Oversight and enforcement country’s allies. Canada’s Marine Security Operations Centres (MSOCs) Transport Canada conducts inspections, reviews and are an example of such interdepartmental integration. approves security plans, and works with stakehold- Located in Halifax, Victoria and the Niagara Peninsula, ers to assist them in meeting the requirements of the the MSOCs involve federal government departments Marine Transportation Security Act and its regulations. and agencies responsible for marine security, asset sup- The department also engages in promotional, edu- port or maritime expertise. The MSOCs enable partner cational and awareness activities to make sure the government departments and agencies to work together regulated community is aware of its legislative and reg- and share intelligence, surveillance and reconnaissance ulatory responsibilities. If violations or non-compliance information through interagency staffing and collabora- instances are found, the department uses a graduated tion. The MSOCs provide Canada with a marine security enforcement approach—advising stakeholders when capability that is resourced, organized and equipped to problems exist, equipping them with information, and ensure maritime domain awareness. providing opportunities to correct problems before further action is taken. Waterside security Due to the potential lack of clear understanding of roles and responsibilities in waterside security in Canadian Maritime Commerce Resilience ports, the Royal Canadian Mounted Police (RCMP) Between 2007 and 2011, Transport Canada’s Maritime and Transport Canada conducted a detailed policy and Commerce Resilience (MCR) initiative worked with the legal analysis of jurisdictional boundaries, adequacy Canada Port Authorities and other members of the standards and federal-provincial mandates to clarify Canadian marine community to strengthen Canada’s roles and responsibilities and better coordinate future supply chain. The MCR initiative promoted the integration activities. Both organizations are currently reviewing the of resiliency principles into an organization’s operations analysis results and developing next steps. and emergency management plans, ensuring that the organization’s assets, dependencies and the supply Harmonization and chain have the ability to mitigate the potential impacts of international partnerships a terrorist attack or other emergency. The MCR initiative also worked to minimize single points of failure in the Canada–United States Regulatory Canadian maritime supply chain, reduce disruptions to Cooperation Council the flow of goods and avoid systemic failures. Through the MCR initiative, a Critical Infrastructure Assessment The Canada–United States Regulatory Cooperation tool was developed and provided to marine stakehold- Council includes several marine security initiatives, such as: ers to assess vulnerabilities in their supply chains and • Greater coordination and consultation between the develop mitigating measures. U.S. Coast Guard and Transport Canada in order to Transport Canada has launched MCR projects in align regulatory requirements where possible. Halifax, Hamilton, Montreal and Vancouver. In 2011, • Aligning the Canadian definition of “Certain Dangerous awareness and outreach initiatives were undertaken to Cargos” (CDCs) with that of the United States to expand and enhance the marine community’s aware- ensure equal treatment for vessels carrying CDCs ness of the importance of resilience planning. across the border. Maritime domain awareness • Incorporating a reference to Alternative Security Maritime domain awareness is having true and timely Arrangements (ASA) in Canadian regulations, which information about everything on, under, related to, adja- would see the two countries agreeing to alternative cent to, or bordering a sea, ocean or other navigable security measures for unique or specific situations. waterway. This requires a coordinated effort within • Exploring the feasibility of developing an expanded the federal government as well as with stakeholders Joint Initial Verification Program to address issues in and global partners. Transport Canada and its part- partnership related to the safety and security of ves- ners—including those in the IMSWG—work together to sels entering the St. Lawrence Seaway.

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• Investigating the feasibility of mutual recognition of coordination of operations and regulatory/policy devel- regulatory oversight regimes for Canadian and United opment in support of a shared vision for security and States’ domestic fleets on the Great Lakes and economic competitiveness. St. Lawrence Seaway. Transport Canada has also worked with the United States on international marine security efforts through Beyond the Border Working Group the IMO, the G8 and the Asia Pacific Economic Cooperation Forum. Canada’s Marine Security Program Canada and the United States have also created a has close relations with the United States Coast Guard, Beyond the Border Working Group (BBWG) com- Department of Homeland Security, Customs and Border posed of representatives from federal departments and Protection and the United States Navy. These joint agencies, including Transport Canada. The BBWG facil- efforts reflect Canada’s role as a maritime nation and itated the development of the Perimeter Security and help maintain and improve U.S. and international confi- Economic Competitiveness Action Plan announced in dence in Canada’s marine transportation system. These December 2011. initiatives also ensure that Canada is able to move The Action Plan includes three initiatives in which the products and people across great distances to world Marine Security Program is actively involved: markets effectively and efficiently. 1. Enhance domain awareness in the maritime Under the Joint Inspection Verification Program, environment. Taking a common approach to Transport Canada has invited the United States Coast threat assessment based on the principle that a Guard to observe Transport Canada inspectors con- threat to either country represents a threat to both. ducting pre-clearance ISPS28-compliance verifications on international vessels prior to their first entry of the 2. Develop a joint strategy to address risks asso- season into the St. Lawrence Seaway/Great Lakes ciated with shipments arriving from offshore, System. These verifications are not full ISPS-verification based on informed risk management. This is examinations but pre-clearance exams designed to key to establishing a harmonized approach to give the United States Coast Guard reasonable assur- screening inbound cargo arriving from offshore, ance that a vessel is in substantial compliance with the which will result in increased security and expe- ISPS/MTSR requirements before entering United States dited movement of secure cargo across the waters and ports. This program strives to reduce dupli- Canada–United States border—under the prin- cation of efforts by reducing the number of subsequent ciple of “cleared once, accepted twice”. inspections of ships entering the system. 3. Collaborate at the regional level between coun- International Maritime Organization tries to facilitate maritime commerce recovery following an emergency. This is intended to mit- The IMO focuses on the improvement of safety at sea igate the impacts of disruption on communities and the prevention of pollution from ships. The IMO and the economy by managing traffic in the event is also responsible for international aspects of liability of an emergency. and compensation and the facilitation of maritime traffic. At the September 2011 meeting of the IMO Trade Facilitation Committee, Canada agreed to co-chair, Bi-national and other along with the United States, a Correspondence Group international partnerships to develop guidance relating to measures that would United States facilitate trade recovery. Over the coming year, Transport Canada will draw and consolidate best practices from Transport Canada has engaged the United States its experience in MCR planning over the past four years, Coast Guard through the Bi-National Marine Security as well as continue to consult with government, industry Working Group, established to enhance coordination partners and the international community in developing of marine security matters of common interest and to these international best practices. ensure a consistent approach to international maritime security. Both participants recognize the continued need to evolve their efforts to include collaboration and

28 International Ship and Port Facility Security Code.

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Anti-crime capacity building Special events

Through the Department of Foreign Affairs and Transport Canada regularly participates in Tall Ships International Trade’s Anti-Crime Capacity Building events. Nova Scotia and the Great Lakes will host Program (ACCBP), Transport Canada participates in some of these events in 2012, and will require Transport international efforts to increase countries’ capacities to Canada to establish exemption measures for facili- apply international standards—mainly the ISPS Code ties the ships interface with and to provide additional and other effective counter-terrorism and security mea- inspections for ships and facilities. sures. The ACCBP provides training, funding, equipment and other technical and legal support to enable other countries to prevent and respond to terrorist activity. Regulatory management Transport Canada and the United States Coast Red Tape Reduction Initiative Guard work with the Organization of American States/ Transport Canada is participating in the Government Inter-American Committee Against Terrorism, under its of Canada’s Red Tape Reduction Initiative, which Port Security Assistance Program, to increase maritime enables businesses and industry to identify regulatory security capacity building (also funded by the ACCBP) irritants that have a clear detrimental effect on growth, throughout Latin America and the Caribbean. To date, competitiveness and innovation. The initiative aims nearly 2,500 port security officials have been trained to reduce administrative barriers and create a healthy in various aspects of maritime security, such as cruise climate for small businesses to further grow and succeed ship facility security, customs and port facility coordina- in Canada. As part of this initiative, Transport Canada is tion, and risk assessment. Transport Canada also has working towards introducing amendments to the Marine bilateral maritime security partnerships with Jamaica Transportation Security Regulations to clarify that and Mexico to provide capacity building and enhanced regulated Canadian-flagged vessels on domestic voy- mutual awareness and understanding. ages may interface with either regulated or unregulated ports and marine facilities, with a view to increasing business competitiveness.

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Increased investment in railway networks. Improved rail safety and security. Strategic partnerships to share track and expand reach, and industry-wide efforts to reduce greenhouse gas emissions. Canada’s rail transportation industry is moving full steam ahead in support of the country’s economic growth.

8.1 oVERVIEw of Rail CN acquisitions—Illinois Central in 1999; Wisconsin Central in 2001; and Great Lakes Transportation in Transportation 2004—as well as a 2004 partnership agreement with BC Rail. CN generates annual freight revenues in Canada With more than 46,000 kilometres of tracks (see on the order of $5.5 billion, and employs 22,000 peo- Addendum Table RA1), the rail transport industry is an ple here and abroad. Meanwhile, CPR operates 22,500 important element of Canada’s transportation system. route-kilometres in six provinces and 13 States, gener- In Canada, the rail transport industry generates approxi- ates almost $4 billion in annual revenues in Canada; it mately $10 billion per year—95% of which comes from has roughly 15,000 employees system-wide. rail freight operations and approximately 5% from commuter, intercity and tourist passenger rail services in Shortline railways are a fundamental component of major urban centres, corridors and regions. the country’s rail network, feeding and delivering traffic to and from mainline railways, originating more than The North American rail industry is highly integrated. 20% of all CN and CPR’s freight carload traffic, and Companies operating on integrated rail networks build moving billions of tonne-kilometres back and forth from track to a standard gauge, and tracks are maintained Class I railways. to similar standards. Loaded rail cars are usually pulled by locomotives owned and operated by the track Passenger railways include intercity rail operators, owner, but North American integration allows railways urban rail transit railways and heritage railways. In 2009, to interchange or hand off cars and locomotives that intercity passenger rail traffic totalled 4.5 million passen- meet industry standards to other railways to complete gers and approximately 1.4 billion passenger-kilometres. a journey. VIA Rail Canada—a Crown corporation established in 1977 that now operates close to 500 trains weekly Canadian National Railway (CN) and Canadian Pacific serving more than 450 communities across 12,500 kilo- Railway (CPR) are the two dominant freight rail opera- metres of rail network—is Canada’s dominant intercity tors in Canada and are both Class I railways, meaning rail passenger service operator, with annual passenger their revenues exceeded $250 million in the past two revenues of $260 to $280 million. It is also a Class I years. Of total Canadian rail transport industry revenues, railway. This is complemented by about $260 million in CN accounts for over 50% and CPR for approximately annual operating subsidies as well as substantial capital 35%. Together, CN and CPR represent more than 95% funding. Remote communities benefit from subsidized of Canada’s annual rail tonne-kilometres, more than intercity passenger rail services provided by carriers 75% of the industry’s tracks, and three-quarters of such as Tshiuetin Rail Transportation Inc. between overall tonnage carried by the rail sector. For Canada, Sept-Iles and Schefferville, while cross-border pas- these two firms serve as important supply chain links senger rail service connections are made possible for Canada’s key trade corridors and gateways. CN in Vancouver through Amtrak’s Cascades service, in crosses Canada from the Atlantic Ocean to the Pacific Niagara Falls through Amtrak’s Empire service, and in Ocean and follows the Mississippi River to the Gulf Montreal through Amtrak’s Adirondack service. of Mexico, linking customers in Canada, the U.S. and Mexico. This has been made possible through various

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A number of tourism rail services are offered throughout increased 8.7%, from 5.3 billion in 2010 to 5.7 billion the country and include Rocky Mountaineer, Alberta in 2011. Fuel represented the largest increase in oper- Prairie Railway Excursions, Great Canadian Railtour ating expenses, rising 34.7%, from $1.0 billion in 2010 Company Ltd., South Simcoe Railway, and Steam Train to $1.4 billion. Expenses in labour and fringe benefits HCW. Commuter rail service is provided by TransLink in increased 3.9%, from $1.7 billion 2010 to $1.8 billion Metro Vancouver, GO Transit in the Greater Toronto and in 2011. Tables EC71 and RA4 provides combined Hamilton Area, and Agence métropolitaine de transport financial results for the Canadian portion of CN and (Metropolitan Transportation Agency) in the Greater CPR’s operations. Montreal area. • CN made several infrastructure investments in 2011, including the construction of a new logistics park in 8.2 2011 Year in Review Calgary, $35 million to improve infrastructure and facility capacity in Alberta, and improvements to its Brampton Intermodal Terminal. These investments by Economic Framework and CN are part of a larger $1.7 billion in capital spending infrastructure in 2011, which included $1 billion for track investment, $500 million on facilities, such as distribution centres • In 2011, Canadian railways carried more than 313 million and information technology, and $200 million on fleet tonnes of freight, up 14.9% from 2010 (see Table RA9). improvements, including new fuel-efficient locomotives and new freight cars. • Some 36 shortline and regional railways operate in Canada. In 2010 they accounted for 22.2% of total • System-wide, CPR earned $5.0 billion in revenues in kilometres of track (see Table RA1) and $655 million in 2011, representing a 4.1% increase over the $4.9 bil- revenues (see Table RA4). lion earned in 2010. Operating expenses increased 8.9%, from $3.9 billion in 2010 to 4.2 billion in 2011. • In 2011, the railway industry in Canada alone Fuel and materials represented the largest increase employed 32,006 people, up 1% from the previous in operating expenses, rising by 33.0 and 13.6%, year (see Table RA5). Average employee annual com- respectively. npensation was $76,554, up 2.8% from 2010. • CPR announced plans to expand its crude oil transload • Labour agreements were reached in 2011 between facility at Estevan, Saskatchewan, serving the Bekken Canadian National (CN) and the Canadian Auto Formation in Saskatchewan, to better handle the Workers’ (CAW) union, the United Steelworkers, and expected 70,000 annual carloads in the future. Also, the Teamsters Canada Rail Conference (TCRC). In as part of its three-year program to improve 1,400 total, these recent agreements now cover approxi- kilometres of its North Main Line between Winnipeg mately 8,575 CN employees. Canadian Pacific Railway and Edmonton, CPR enhanced 250 kilometres of (CPR) also reached labour agreements with CAW that track. These investments by CPR are part of a larger cover its mechanical services employees, and VIA billion-dollar capital investment plan for 2011, which Rail reached a labour agreement with TCRC that cov- included $680 million for track infrastructure, $200 ers its locomotive engineers. Table EC54 shows that million for volume growth, productivity initiatives and in 2011, only one work stoppages occurred in the rail network enhancements, $80 million to upgrade its industry and it impacted 109 workers. information technology systems and $40 million prin- • In March 2011, Metrolinx purchased a section of CN’s cipally in train control and other regulated capital. Kingston Subdivision in eastern Toronto for $299 • In December 2011, CPR announced its intent to million. The rail line encompasses the two- and three- further develop its long-train strategy, which aims track rail corridor east of Union Station to a junction to increase intercontinental train length by 11% by near Whites Road in Pickering, Ontario, where the line 2013. CPR’s intermodal trains have grown in length to then connects with GO Transit’s separate rail right-of- 12,000 feet—an increase of 40% since 2008. way. With this purchase, Metrolinx now owns 61% of the rail corridors within which GO Transit operates. • In 2010, VIA Rail Canada reported revenues of $274.4 million and a loss of $261.5 million. The federal gov- • System-wide, CN earned $9.0 billion in operating rev- ernment provided $261.5 million in operating funding enues in 2011. This represents an 8.8% increase over and $268.6 in capital funding. 2010 revenues of $8.3 billion. Operating expenses

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• In 2010, VIA Rail Canada, experienced a 1.3% decrease • Under the framework of the Regulatory Cooperation in passenger-miles (see Table RA30), while increases Council, a joint Canada-U.S. action plan was in the average fare resulted in a 3.2% increase in pas- announced in December 2011 to align regulatory senger revenues. approaches between the two countries. The action plan involves 29 initiatives, including a commitment • VIA Rail completed $300-million infrastructure upgrades to work together to reduce GHG emissions from in its Montreal–Ottawa–Toronto corridor, and opened a locomotives. new $750,000 station in Smiths Falls, Ontario. • A Memorandum of Understanding (MOU) on • VIA Rail also announced a series of new marketing- coordination of efforts related to noise and vibra- oriented initiatives and service agreements to improve tion complaints and road, utility or private crossings customer service and productivity. These include was signed with the Canadian Transport Agency in new partnerships with GO Transit in Toronto and September 2011. The purpose of this MOU is to set bus services in western Canada to integrate travel out the responsibilities and understandings between connections, improvements to on-board customer the participants with respect to railway noise and Internet access through Wi-Fi, and the use of new vibration complaints and opening and closing of road, social media forums such as Twitter and Facebook. utility and private crossings. • There were 13 commuter rail lines operating in Canada and serving the Montreal, Toronto and Safety Vancouver metropolitan areas. In 2010, they carried 64.3 million passengers (see Table RA31). • In 2011, 1,023 railway accidents took place in Canada (see Tables S1 to S5) causing 71 fatalities. Both of Environment these figures are significantly lower than those reported in 2010 (1075 accidents and 81 fatalities). • In 2010, railways consumed 1.9 billion litres of fuel, • Bill S-4, the Safer Railways Act, was introduced in up 9.2% from the previous year (see Table RA6). This the Senate on October 6, 2011. The Bill received increase was driven by a 13.8% increase in tonne- Senate approval with one minor amendment on kilometres carried as the economy was recovering December 7, 2011. from the previous year’s recession. • In keeping with the Rail Safety Strategic Plan 2010–2015, • In 2011, CN and CPR announced plans to improve Transport Canada launched the first phase of its their locomotive fleet fuel efficiencies and lower emis- national data collection system in 2011 and made sions by purchasing new locomotives and rebuilding significant progress on its implementation of risk- some of their existing fleets. based planning and quality management procedures. • In February 2011, Transport Canada completed Transport Canada also expanded its training program preliminary consultations on the development of for regional safety inspectors. locomotive air pollutant emission regulations. Six • Transport Canada invested nearly $14 million under consultation meetings were held in Ottawa, Montreal, the Grade Crossing Improvement Program (see Table Vancouver and Detroit. G3) to make safety improvements at 810 railway • In 20081, greenhouse gas (GHG) emissions from the crossings across the country. rail sector were 7.1 Mt CO e. Rail emissions accounted 2 • CPR and Parks Canada hosted a symposium to for 4% of domestic GHG emissions from transporta- reduce railway and bear conflicts in Jasper National 2 tion, and less than 1% of total Canadian emissions Park. CPR will invest up to a million dollars in research (see Table EN4). aimed to reduce these collisions. Both organizations • In 2009, rail accounted for only 9% of all trans- have already collaborated on a number of initiatives, including on-track structures such as peg boards that portation-related NOx emissions and 6% of PM2.5 emissions, but contributed about 2% of other trans- discourage bears from using the tracks as an escape portation-related air pollutants3 (see Table EN6). path, strategic vegetation management and supporting fencing structures with electro-mats.

1 The year for which the latest data is available. 2 Environment Canada (2011). Canada’s Emissions Trends. 3 Environment Canada (2011). National Pollutant Release Inventory.

2011Transportation in Canada 79 8 Rail Transportation

Security improve the overall efficiency, reliability and fluidity of the rail network. • Transport Canada continued efforts to enhance the Canada’s transportation policy outlined in the Canada security of rail and urban transit systems through col- Transportation Act emphasizes a strong reliance on laborative efforts with industry and the development competition and market forces. The Act also contains of additional Codes of Practice. a number of shipper protection provisions that were • Prime Minister Harper and President Obama strengthened through amendments in Bill C-8, which announced a Beyond the Border Declaration in 2011, received Royal Assent on February 28, 2008. which included action items that will help enhance the Following these amendments to the Act, in 2008 the efficiency and security of Canada’s supply chains— federal government announced the terms of reference including Canada’s rail corridors. for the Rail Freight Service Review that set out the following objectives: 8.3 2007–11 Recap • conduct a review of the rail-based logistics chain; • identify problems and issues with railway service; and Economic Framework and • make recommendations on how to address these infrastructure problems and issues, including commercial and, if necessary, regulatory solutions. reight railway performance F The federal government received the review’s Final Canadian freight railway performance, in terms of Report in December 2010, and has begun implementing volume, reflected the trends in the overall economy its response, as announced on March 18, 2011. More between 2007 and 2011. Canadian railways carried a information on the Rail Freight Service Review is avail- total of 353.3 million tonnes of freight in 2007, which able in section 8.4 was a slight decrease from 357.4 million tonnes in 2006. In mid-2008, at the onset of the financial downturn, total The passenger rail picture tonnage carried by Canadian railways decreased to 336.64 million tonnes. By 2009, the total had decreased In passenger rail, VIA Rail Canada operated essentially to 278.9 million tonnes of freight—a decline of nearly the same network of services over the 2007–2011 period, 57.8 million tonnes from the already depressed level of but did temporarily suspend its Victoria-Courtenay ser- 2008. This decline of 17.2% per cent took annual freight vice in March 2011 due to poor track conditions. In carriage to its lowest point since 1998. As the economy 2011, VIA increased its number of Montreal–Toronto began to show signs of recovery in 2010, total tonnage trains by combining three westbound and two east- carried by Canadian railways rose again to 313.5 million bound Montreal–Ottawa and Ottawa–Toronto trains to tonnes of freight in 2011 (see Table RA9). operate through Ottawa. Between 2007 and 2011, CN saw its revenues VIA’s revenues reflected trends in the overall economy. increase by 14.3% (or 3.6% on average annually), going Revenues increased between 2007 and 2008, rising from $7.9 billion to $9 billion. Net income followed suit, from $285.6 million to $299.2 million, and then fell in with an average increase of 3.5% per year during that 2009 to $264.9 million due to reduced demand asso- period. Meanwhile, at CPR, revenues increased by ciated with the global financial crisis. Revenues began 7.3% during that period, going from $4.7 billion to $5.2 to rise in 2010 as the economy recovered, increasing billion. However, net income actually declined during to $274.4 million. Operating costs grew because of ris- the period, dropping from $946.2 million to $570 million. ing fuel prices and compensation increases driven by the need to resume pension contributions. Over the Despite the varying volumes and fluctuations in rev- 2007–2010 period, costs rose from $486.2 million in enues since 2007, Canadian railways have consistently 2007 to $513.4 million in 2008, $526.1 million in 2009 increased investment in their networks. Collectively, and $535.9 million in 2010. Please see Tables RA4 and railways increased their $2.1-billion capital investment EC71 for more details. in 2009 to $2.3 billion in 2010—an increase of 9.5%. In 2011, Canadian railways increased their collec- Capital investment rose considerably. In October tive investment to $2.7 billion, a 17.4% increase from 2007, the federal government approved a program to 2010. This consistent capital investment is intended to inject $691 million into VIA, of which $516 million was

80 Transportation2011 in Canada Rail Transportation 8 earmarked for capital improvements. Capital expen- In May 2007, a Memorandum of Understanding (MOU) ditures in 2007 totalled $12.4 million. In 2009, as part to reduce railway air emissions was signed between of the Economic Action Plan implemented by the Transport Canada, Environment Canada and the Government of Canada to stimulate the economy, VIA Railway Association of Canada. The MOU covered the received an additional $407 million in capital. In 2011, period from 2006 to 2010 and identified commitments capital expenditures totalled $208 million. Most invest- of Canadian railway companies to reduce GHG and ments were concentrated on the Quebec-Windsor criteria air contaminants (CAC) emissions on a voluntary Corridor, which accounts for 75% of VIA’s revenues and basis. These measures were agreed upon as an interim 91% of its ridership. The greatest portion was directed step to a regulatory regime. As part of the MOU, an towards equipment, stations and infrastructure in that annual Locomotive Emission Monitoring report is pro- corridor, with the goal of improving service by reducing duced by the Railway Association of Canada. trip times and increasing frequencies. Safety Environment A four-member panel appointed in 2007 by the Minister Freight rail GHG emissions increased from 6.6 Mt to of Transport to conduct a comprehensive review of the 6.9 Mt between 1990 and 2008, equivalent to 4%, for a Railway Safety Act (RSA) published its final report enti- yearly average increase of 0.2% per year. Due to loco- tled Stronger Ties: A Shared Commitment to Railway motive efficiency improvements, total GHG emissions Safety. The report was preceded by a year of national remained fairly stable while total tonne-kilometres trav- consultations, and presented 56 recommendations elled grew significantly. Freight rail GHG emissions are to improve rail safety. It was tabled in the House of forecast to increase by 15% (0.9% annually), from 6.0 Commons in March 2008. Mt to 6.9 Mt from 2005 to 20204 (see Figure EN12), as a result of increased rail traffic. The GHG emission inten- During the same period, the Standing Committee on sity of freight and passenger rail improved significantly Transport, Infrastructure and Communities launched from 1990 to 2008, by 24% and 26% respectively (see a national study on railway safety in Canada. The Figure EN13). Committee accepted the findings of the RSA review report and tabled its own report in the House of Commons in May 2008 with 14 additional recommen- Freight-related Rail GHG Emissions dations to improve rail safety. Work is underway with stakeholders to implement the two reports’ recommen- From 1990–2009, rail particulate matter (PM ) 2.5 dations; some will require legislative changes. emissions increased by approximately 1,000 tonnes, while SOx emissions fell by almost 3,000 tonnes, NOx Since the launch of the review, Canada’s three Class emissions decreased by 14,722 tonnes, VOC emissions I railways have made significant progress in upgrading increased by approximately 600 tonnes and CO emis- their safety systems and safety performance. CN, CPR sions fell by 5,582 tonnes (see Figure EN14). and VIA Rail have all increased their levels of consultation and communication with the regulator, enhanced In a 2006 Notice of Intent, the Government of Canada their focus on safety management systems, launched announced its intent to develop locomotive air emis- a variety of new safety initiatives related to operations sions regulations. Locomotive emissions regulations are and infrastructure, and are working towards the devel- being developed by Transport Canada under the Railway opment of a strong safety culture at all levels of their Safety Act in two phases, recognizing the high degree of organizations. These endeavours have paid off. Since integration of the North American railway industry: 2007, train accidents have decreased by 23% and pas- • regulations aligned with those in the U.S. are being senger train accidents have decreased by 19%. developed to limit the release of air pollutant emis- Since 2007, Transport Canada’s number of railway sions from the rail sector; and safety inspectors has increased and inspector training • regulations to limit the release of GHG emissions will has grown. Risk-based planning and quality manage- be developed within a North American context. ment procedures have been implemented, capacity for data management and analysis improved, consultation

4 Environment Canada (2011). Canada’s Emissions Trends.

2011Transportation in Canada 81 8 Rail Transportation and communication initiatives with industry expanded, Games by establishing security rules for federally reg- and research and development of new safety technolo- ulated railway companies operating in the Olympic gies sponsored. As well, Transport Canada continued region. These rules, developed in close consultation its efforts to harmonize regulatory requirements with with the affected railway companies, included require- the U.S., and furthered the implementation of safety ments to implement security controls related to access, management systems in the rail industry. A suite of physical security, monitoring, communications and safety management system guides for large and small coordination, response to security incidents, employee railways was published, which aimed to enhance safety training, and public awareness. In June 2010, Transport culture in the rail industry. Canada enhanced railway security for the G8 and G20 Summits by establishing security measures for federally regulated railway companies operating in Huntsville, ecurity S Ontario and Toronto, Ontario. Transport Canada continued to collaborate with the railway industry and encourage the adoption of appropriate security measures designed to enhance the security of 8.4 Economic Framework Canada’s transportation systems. In 2007, Transport and Infrastructure Canada revised an existing, 10-year-old MOU with the Railway Association of Canada (RAC) established to enhance security of the railways represented by RAC. Class I freight railways The MOU outlined specific requirements for railway In 2011, Canada’s two Class I freight railways—CN security that both parties were expected to abide by. and CPR—collectively spent more than $2.7 billion Since 2007, Transport Canada has also been on capital programs for track and roadway, buildings, developing voluntary security standards, or Codes of rolling stock and information systems. CN invested Practice (CoPs), through the Steering Committee for approximately $1.7 billion in track improvements, rolling Rail and Urban Transit Security Standards Development stock and better facilities. Meanwhile, CPR announced formed that year. The Committee includes Transport approximately $1 billion in capital investment for 2011 Canada, major rail and transit operators, RAC and to increase capacity and enhance network redun- the Canadian Urban Transit Association. To date, four dancy. These investments aim to improve rail service Codes of Practice have been completed: by enabling CPR to carry additional traffic more reliably and by ensuring a more resilient network when faced • Developing and Maintaining Security Plans for Rail with severe weather disruptions. The proposed invest- and Transit Operations ment includes the purchase of 91 new locomotives and • Conducting Security Risk Assessments of Rail and the hiring of 1,800 new employees. Transit Operations Both railways continue to develop longer trains to • Conducting Security Exercises for Rail and enhance network velocity and productivity while reduc- Transit Operations ing labour costs and increasing fuel efficiency. This strategy has required significant capital investment in • Employee Training and Awareness for Rail and Urban locomotive upgrades and siding extensions to ensure Transit Security sufficient capacity within the rail network. As a result of the railways’ continued investment, the average number The CoPs serve as useful tools to enhance the of cars per train has increased from 73 in 2001 to 92 security of rail and urban transit in Canada; operators in 2010. have adopted the CoPs on a voluntary basis. Transport Canada intends to continue developing and promoting The 14% increase in volume from 2009 to 2010 can CoPs to enhance the security of transit, rail and intercity be attributed to intermodal traffic that increased by buses in Canada. 3.75 million tonnes, representing an increase of nearly 11.6%. Tables RA28 and RA29 provide more detail Under the Railway Safety Act, the Minister of Transport on intermodal rail volumes. Bulk commodities also is granted a number of powers to enhance the security increased significantly, including a 38.2% increase in of Canadian rail operations. Several of these provisions coal and a 6.1% increase in forest products. This was have been used successfully to enhance the security offset by 4.3% decline in grain volumes. Tables RA17 to of special events. In January 2010, Transport Canada RA20 provide more information on commodities trans- enhanced railway security for the 2010 Olympic Winter ported by rail.

82 Transportation2011 in Canada Rail Transportation 8

In 2010, Class I railway revenues accounted for Rail Freight Service Review 93.8% of total revenues in the railway sector. The largest increases in rail sector revenues in 2010 were mainly The Rail Freight Service Review was launched in 2008 the result of significant gains in bulk goods (+8.7%) and to identify ways to improve the efficiency, effectiveness intermodal transportation (+6%). In 2010, CN and CPR and reliability of Canada’s rail-based logistics sys- collectively employed approximately 29,193 people (see tem. The review used quantitative analysis to reach a Table RA5). better understanding of the nature and extent of problems within the logistics chain, as well as a three-person Since 2010, CN and CPR have signed agreements with panel that consulted extensively and received written shippers and other stakeholders designed to establish, submissions from stakeholders across the system. The measure and improve various performance and service panel submitted its final report to the Minister of State measures. CPR signed agreements with the Montreal (Transport) in December 2010. Port Authority, the Vancouver Fraser Port Authority (Port of Metro Vancouver), Teck Coal Ltd., DP World On March 18, 2011 the federal government announced Vancouver, TSI Terminals5, CSX and Delaware & Hudson its response to the Rail Freight Service Review, indicat- Railway. CN signed agreements with the Halifax Port ing its acceptance of the Panel’s commercial approach Authority, the Montreal Port Authority, the Port of Metro and its intention to implement a number of measures to Vancouver, Prince Rupert Port Authority, the Port of improve the performance of the entire rail supply chain. Quebec, TSI Terminals, Viterra, Maher Terminals (Prince On October 31, the government announced the appoint- Rupert), Ridley Terminals (Prince Rupert), Coalspur, Agri- ment of an independent facilitator, Mr. Jim Dinning, to food Central, Raymont Logistics, Squamish Terminals lead a six-month facilitation process for developing a and Western Coal Corporation. template for a service agreement and streamlined commercial dispute resolution process between railways and stakeholders. In support of these commercial mea- Shortline freight railways sures, the federal government also intends to table a bill A total of 37 shortline railways operated in Canada in 2011. that will give shippers the right to a service agreement In 2010, shortline railways accounted for 10,169 kilome- with the railways, and to provide a process for establish- tres of track, representing approximately 22.2% of total ing agreements when commercial negotiations fail. track kilometres in Canada. Big Sky Rail opened on September 22, 2011 in Saskatchewan; the shortline rail- VIA Rail Canada way operates in the southwest of the province on 354 km of track purchased from CN. These shortline operations VIA operates a national network of services in eight will contribute to moving grain from southwestern contiguous provinces. Its services fall into three catego- Saskatchewan for export. Big Sky Rail is a partnership ries: Quebec–Windsor Corridor, Transcontinental, and that includes Mobil Grain Ltd.—which has been hauling Regional and Remote. The Quebec–Windsor Corridor is grain cars with locomotives on the shortline track since a major focus: multiple daily trips are offered between September 6, 2011—and West Central Road & Rail, all Corridor cities. Two transcontinental trains operate which has five grain-loading facilities along the short- six round trips per week between Montreal and Halifax, line. Both have an equity position in Big Sky. and three round trips per week between Toronto and Vancouver via Winnipeg and Edmonton. The transconti- In 2010, shortline railways carried a total of 73.9 mil- nental trains account for 22% of VIA’s revenues and 6% lion tonnes of freight. This is an increase of nearly 11.5 of its ridership. million tonnes from 62.5 in 2009—or 18.3%. During the 2002–2010 period, shortline railway revenues Seven regional and remote services are operated decreased by 3.7% per year, on average. Shortline rail- Canada. Two regional routes serve Matapedia–Gaspe way revenues accounted for 6.2% of total revenues in and Victoria–Courtenay, while remote services run from the railway sector in 2010. In that same year, shortline Montreal–Jonquiere, Montreal–Senneterre, Sudbury– railways employed approximately 2,813 people. White River, Winnipeg–Churchill, and Jasper–Prince Rupert. These seven services account for 2% of VIA’s revenues and 3% of its passengers.

5 TSI operates the Deltaport and Vanterm container terminals at the port of Metro Vancouver. It handles about 70% of containers in Vancouver, making it the largest container operator in Canada.

2011Transportation in Canada 83 8 Rail Transportation

In 2011, VIA operated up to 497 trains weekly on VIA is incorporating the accessible coach bathroom 12,500 kilometres of track. Most of this network (83%) design from its Renaissance Cars into the Light Rapid is owned by Canada’s major freight railways (CN: 79%, and Comfortable (LRC) and Rail Diesel Car (RDC) fleets, and CPR: 4%). Shortlines own approximately 15%, which will greatly enhance their accessibility. VIA is and VIA owns the remaining 2%. VIA has Train Service also rebuilding some of the sleeping cars used on the Agreements with the major and shortline freight railways western transcontinental train. As part of this project, that define VIA’s access to rail infrastructure. Shortline provision is made to have one accessible sleeping car infrastructure is maintained to reflect the freight market room on the train, which is currently not wheelchair along the rail line, which does not demand the same accessible. Other accessibility features of the overhauled level of track quality as passenger rail service. As a LRC and RDC cars include the provision of a number of result, VIA’s services on these routes operate at slower seats with fold-up armrests and enhanced space for ser- speeds, thus impacting its on-time performance over vice animals. which it does not have full control. Two VIA Rail stations—Montreal Central Station and High speed rail Quebec Station—allow for level-entry boarding for persons using mobility aids. VIA Rail uses wheelchair lifts A feasibility study for a high speed rail service (HSR) in the at 48 different locations across Canada. As part of its Quebec City–Windsor Corridor was conducted on behalf Capital Investment Program, VIA is upgrading and mod- of Transport Canada, the Ministry of Transportation of ernizing more than 50 of its passenger stations across Ontario and the Ministry of Transportation of Quebec by Canada. For example, at the Belleville, Oshawa and EcoTrain, a group of international consulting firms led by Cobourg stations, an overhead footbridge has been Dessau and comprising Deutsche Bahn International, constructed with an elevator on either side of the tracks KPMG, MMM Group, and Wilbur Smith Associates. to facilitate access. The joint study included an assessment of high-speed train technologies, potential routings, traffic forecasts, As part of a program to modernize rail passenger and financial and economic (cost-benefit) analyses. The services, VIA is currently undertaking a major overhaul study also evaluated socioeconomic, environmental and of its fleet of rail cars, which includes extensive changes transportation system impacts of two HSR technologies to improve accessibility. Improvements are being made based on speeds of 200 kilometres per hour (km/h) using to Renaissance cars to address the 14 mobility obsta- diesel traction and 300 km/h using electric traction. It cles identified by the Canadian Transportation Agency further identified potential routes to accommodate each under the Passenger Rail Car Accessibility Code of of the 200 and 300 km/h technologies including sta- Practice. The work being carried out by VIA includes tions at Quebec City, Trois-Rivières, Montreal, Ottawa, modifications to washrooms, the coach seating area Kingston, Toronto, London and Windsor. and sleeping car rooms to better accommodate passengers who are mobility impaired. The financial analysis considered a government financing case (wholly public) and a partly private sector-funded case (private sector). The total development costs in 2009 dollars for the full Quebec City–Windsor VIA Rail’s Accessibility Policy Corridor are estimated to be between $18.9 billion for the 200 km/h technology and $21.3 billion for the 300 VIA Rail Canada offers a free fare to the attendant of a person with km/h technology. Developing the section between a disability who requires assistance with meeting his/her personal Montreal–Ottawa–Toronto could cost between $9.1 for needs. In order for a working guide dog or certified service animal to have adequate space, VIA Rail also provides the passenger with 200 km/h and $11 billion for 300 km/h. The main find- a second seat free of charge. If the size of a seat is not adequate for ings from the financial analysis for both the public and a passenger’s size, or if a passenger has a disability for which one private sector cases for the full Quebec City–Windsor seat is not sufficiently comfortable, VIA will offer two side-by-side Corridor indicate that while the project could cover all seats with the second seat at a reduced price. More information on operating costs, governments would need to contrib- VIA’s policies on accessibility is available at http://www.viarail.ca/ en/useful-info/special-needs/reduced-mobility ute significantly to the project development cost and receive no financial return on investment.

6 See http://www.tc.gc.ca/eng/policy/acg-acgb-high-speed-rail-2956.htm

84 Transportation2011 in Canada Rail Transportation 8

Commuter rail provided $146 million in funding for the revitalization of Union Station, the busiest commuter hub in Canada, Commuter rail provides service between outlying to increase passenger flow and station capacity. In municipalities and a downtown rail station, and typi- Montréal, P3 Canada has partnered with the AMT and cally focuses on capturing work trips. In this respect, the Government of Quebec to construct a train mainte- commuter rail differs from other forms of urban transit, nance facility for commuter trains. P3 Canada will provide which typically promotes mobility throughout an urban $25 million in funding for the project. In Vancouver, the area with more diverse origins and destinations. Given federal government provided over $9 million in funding that the origins of most commuters using such systems through the Building Canada Fund for the West Coast are inter-urban, commuter rail in Canada’s larger cit- Express commuter service. Funding was used to pur- ies is operated by provincially created transportation chase seven new rail cars, lengthen station platforms agencies. and install security cameras. Examples of such provincial agencies include the Agence métropolitaine de transport (AMT, or Air-rail links Metropolitan Transportation Agency) in the Montreal area, the GO Transit division of Metrolinx in Ontario, and Air-rail links are rail lines that connect major airports Translink in British Columbia, which operates the West to a downtown rail station or hub in order to improve Coast Express. accessibility to airports and improve intermodal connections. These links may take the form of either a In Montreal, the provincial government is financing the dedicated rail line or an extension of an existing urban construction of the Train de l’Est (Eastern train) to con- rail transit system to service an airport. Because air-rail nect downtown Montreal to Mascouche on the North links contribute to the overall efficiency of the trans- Shore of the St. Lawrence. The project was initially portation system, reduce congestion and improve budgeted for $300 million, an amount that has since intermodal connections, the federal and provincial gov- been revised upwards. The province also provided $159 ernments have committed significant funding to various million of the $236 million necessary to buy 10 new air-rail links. Bombardier bi-modal (diesel/electric) locomotives to be used for commuter trains using the Mount-Royal tunnel. In Vancouver, the federal government provided $450 million, British Columbia provided $435 million, Translink In the Greater Toronto and Hamilton Area, the (the provincial agency responsible for transit in the Government of Ontario plans to invest over $11.7 bil- Lower Mainland) provided $334 million, the Vancouver lion in its MoveOntario 2020 project, which includes the Airport Authority provided $300 million, and the City Big Move regional transportation plan for the region. of Vancouver provided $29 million to build the Canada This plan calls for the construction of 902 kilometres Line, a 19.2-kilometre urban transit rail link between of new or improved rapid transit. While not completely Richmond, the Vancouver International Airport and dedicated to commuter rail, Big Move has drafted initial Waterfront Station in Downtown Vancouver. The project plans that include important capacity expansion, three was delivered through a public-private partnership with rail extensions and up to five new rail lines. Finally, the SNC-Lavalin and has been in operation since 2009. It governments of Canada and Ontario each contributed has already exceeded ridership projections, with over $150,000 for a preliminary engineering study to revive 110,000 riders a day in 2011. commuter train service between Peterborough and Toronto’s Union Station, 120 kilometres away. In Toronto, the Union Station–Pearson Airport link will provide a fast, efficient connection between the busiest At the federal level, as part of its commitment to passenger rail and air hubs in the country. Construction reduce greenhouse gas (GHG) emissions, ease urban on this project is expected to begin in the spring of 2012 congestion and promote mobility options for Canadians, and be completed in time for the 2015 Pan American the Government of Canada has made significant invest- Games. The project is expected to cost between $300 ments in commuter rail, in partnership with provincial to 400 million, including $128 million to build the rail governments. In the Greater Toronto Area, the federal spur to the airport. The federal government, through the government has committed $250 million since 2008 Canada Strategic Infrastructure Fund, will provide $68.7 to expand and upgrade commuter rail facilities in the million to upgrade the Georgetown rail corridor, which region, including corridor upgrades and track construc- will be used by both the air-rail link and GO Transit com- tion for GO Transit as well as increased park-and-ride muter trains. The province of Ontario, through Metrolinx, facilities at stations. The federal government has also is funding the balance.

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In Montreal, the airport authority, Aéroports de Steam train excursions are operated in western Montréal (ADM), has proposed the construction of a Canada by Prairie Dog Central Railway from Winnipeg, rail shuttle service between downtown Montreal and Alberta Prairie Railway from Stettler, Kettle Valley Steam Montreal-Trudeau Airport to speed-up the journey to Railway from Summerland, Kamloops Heritage Railway and from downtown. Under current circumstances, from Kamloops, and Alberni Pacific Railway from Port adding trains on the western part of the island is a chal- Alberni. The Omega Heritage Railway Association will lenge, as tracks between downtown and Dorval are begin excursions out of Omega, Saskatchewan in 2012. already operating at capacity. ADM aims to increase rail capacity by adding new tracks for a rail shuttle—the The White Pass & Yukon Railway, which carries more Aerotrain. All three levels of government and ADM are than 300,000 passengers from Skagway, Alaska into the currently studying the project. Yukon through the historic White Pass, is the busiest tourist railway and the only international tourist train in North America. The company has constructed new passenger Tourist trains cars and rebuilt its locomotive fleet to handle this market.

Tourist trains are a growing sector of passenger rail and generally operate in the spring, summer and fall months. 8.5 Environment Most trips are one to two hours, although some can encompass one or two days. Regulating locomotive emissions The oldest tourist train operation in Canada is the Algoma Central Railway, now a subsidiary of Canadian Almost all locomotives used by North American railway National, which began promoting same-day return trips companies are built to meet U.S. emissions standards. from Sault Ste Marie to Canyon, Ontario in the 1960s. The principal locomotive air pollutant emissions are

The train was completely re-equipped with rebuilt pas- NOx, PM, SOx, VOC and CO. The main GHGs linked to senger cars and locomotives in 2011. locomotive emissions are carbon dioxide, methane and nitrous oxide. The Ontario Northland Railway began to operate its Polar Bear Express tourist train between Cochrane and Moosonee, Ontario in the 1960s. More recently, the railway introduced a fall foliage excursion between Jurisdiction of Environment and North Bay and Temagami. The Ontario government Rail Transportation announced a $10-million refurbishment program, to be The framework of environment-related legislation governing carried out in 2012. the railway industry is shared among federal authorities—mainly Transport Canada and Environment Canada—and with provincial In southern Ontario, the South Simcoe Railway operates ministries. Within this framework, numerous pieces of environmen- steam train excursions out of Tottenham, while the York- tal legislation focus on protecting air, water, soil, wildlife, and the Durham Railway operates diesel trips between Uxbridge public interest. and Stouffville. Also in this area, Waterloo Central oper- The Railway Safety Act provides the legislative basis for developing ates steam train excursions from Waterloo, and Port regulations governing rail safety, security and some aspects of envi- Stanley Terminal Rail operates diesel trips out of Port ronmental impacts of rail operations in Canada. The Railway Safety Stanley. Act provides authority for the Governor in Council to make regulations concerning the release of pollutants into the environment from the oper- In Quebec, the Orford Express provides gourmet ation of railway equipment by federally regulated railway companies. dinner train service out of Sherbrooke. A new service, Under the Canadian Environmental Protection Act, Environment the Train Le Massif of Charlevoix, began service from Canada sets regulations for dealing with spills on federally regulated Quebec City to the Charlevoix region in 2011. The train railway rights-of-way. is scheduled to operate various itineraries year-round— Provinces have jurisdiction for provincially regulated railways. a first for this sector. Provinces are also responsible for their municipalities through various regulatory instruments that govern planning and development, Rocky Mountaineer Railtours operates two-day emergency services, and environmental protection. Provinces have excursions from Vancouver to Jasper and Banff. The jurisdiction over spills and environmental incidents on provincial Canadian Pacific Railway operates the Royal Canadian lands, including environmental response, clean-up and remediation. Pacific, providing steam and diesel excursions on multiple day trips in Alberta and British Columbia.

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In 2000, the U.S. Environmental Protection Agency Railway environmental initiatives (EPA) implemented air pollutant emissions regulations for the rail sector, and updated and revised them in Since 1995, Canadian railways have taken measures to 2008. These regulations ensure that locomotives built reduce locomotive emissions under two Memoranda of for sale in the U.S. meet strict emissions standards for Understanding. The first MOU was between the Railway Association of Canada (on behalf of the Canadian rail- NOx, PM, hydrocarbons and CO. ways) and Environment Canada, and was in effect from Transport Canada is developing regulations under the 1995 to 2005. The second was between the Railway Railway Safety Act that align with U.S. EPA regulations, Association of Canada, Environment Canada and applicable in the Canadian context. While Canadian and Transport Canada. It covered the period 2006–2010 U.S. approaches to regulation will differ slightly due to and identified Canadian railway company commitments differences in legislation (the U.S. regulates manufacturers to reduce GHG and air pollutant emissions on a volun- of engines while Canada regulates rail operators), the tary basis. environmental outcome will be similar. Canada’s Class I freight railways invest in the economic In February 2011, Transport Canada completed and environmental sustainability of their railway operations preliminary consultations on the development of loco- through fleet renewal programs, technology improve- motive criteria air contaminant emission regulations. Six ments, and adoption of best practices. Both of Canada’s consultation meetings were held in Ottawa, Montreal, Class I freight railways have fleet renewal programs in Vancouver and Detroit. A total of 16 formal written place to rebuild or replace less efficient locomotives submissions were received. Canadian railway compa- with newer, more fuel-efficient models. New locomotives nies and their association, the Railway Association of are built to a higher environmental standard and emit Canada, as well as other stakeholders identified the fewer GHG and CAC than older locomotives. Canada’s alignment of Canadian and U.S. regulatory requirements Class I freight railways have continued to deploy new as an important priority. operational measures and technology aimed at reduc- In addition to regulations for air pollutant emissions, ing locomotive emissions. Initiatives to reduce fuel regulators in both Canada and the U.S. have commit- consumption and emissions include improvements to ted to address GHG emissions from locomotives as part equipment, operations, technology and infrastructure. of the Joint Action Plan for the Canada-United States Examples of various initiatives include: Regulatory Cooperation Council. Equipment Locomotive emissions monitoring • Locomotive fleet renewal—progressive renewal of fleets Under the terms of the 2006–2010 MOU, a Locomotive that are compliant with U.S. EPA emissions standards. Emissions Monitoring (LEM) report is published annually by the Railway Association of Canada.7 LEM reports • Distributed power—placing a remote-controlled demonstrate the progress achieved by railway operators locomotive within or at the end of a freight train, towards meeting 2010 GHG efficiency-based targets which provides greater optimum locomotive power set out in the MOU, as well as air pollutant emissions- assignment and better air distribution for braking, par- related commitments. ticularly effective when combined with the running of longer trains. The 2009 LEM report summarized GHG emission intensities by category of railway line-haul operation Operations achieved in 2009, compared with annual levels from • Crew training and incentives—training programs that 2006, 2007 and 2008 and with 2010 MOU targets, as boost awareness of the importance of fuel conserva- shown in Table RA-29. This table shows that most tar- tion practices. gets for 2010 were achieved in 2009. • Manual shut-down of locomotive engines—idle Overall fuel consumed by railway operations in Canada shut-down policies in place for locomotives not increased from 1,770 million litres in 2009 to 1,932 equipped with anti-idling systems. million litres in 2010. This 9.2% increase in fuel consumption was largely attributable to a 13.9% increase in • “Block” consolidation of cars with similar destina- revenue tonne-kilometres and offset by improvements tions—joining cars headed the same way reduces in energy efficiency (see Tables RA6 and RA7). delays and increases fluidity at rail yards and terminals.

7 For more information, visit www.railcan.ca/publications/emissions

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8.6 Safety Research in Environmental Improvements for Rail Transportation Railway Safety Act Review Government, industry and academic stakeholders continue to work collaboratively and conduct research to facilitate improvements to In 2007, following a series of high-profile derailments rolling stock (e.g. developing and testing novel engine concepts), in Quebec, Alberta and British Columbia, the Minister of infrastructure interface (e.g. developing new rail materials) and operational improvements (e.g. examining alternative fuels and fuel Transport appointed an independent panel to review the sources). Current rail research activities also include improvements existing Railway Safety Act (RSA) and make recommen- to measurement, monitoring and verification methodologies in dations for improving both the Act and railway safety support of rail emission reductions. Currently, Transport Canada’s in general. Transportation Development Centre is undertaking a technology and infrastructure scan to make recommendations on promising Over one year, the panel gathered input from a full emission reduction technologies and research opportunities in this spectrum of stakeholders, including railway compa- area, to inform regulations and a five year research agenda for future nies and their associations, railway unions, shippers, policy development. suppliers, other national organizations, other levels of government including municipalities, and the public. These extensive consultations resulted in a final report, Stronger Ties: A Shared Commitment to Railway Safety, Technology which included more than 50 recommendations for improving safety in the rail industry. As a result of this • Anti-idling technologies—these include, for example, report, the federal government introduced the Safer automatic stop/start devices that help railways con- Railways Act (S-4) in the Senate on October 6, 2011 to serve fuel and reduce emissions by automatically amend the RSA. It was approved on December 7, 2011, shutting down locomotives at rest. and tabled in the House of Commons the following day. • Low-idling engines—those that idle at a reduced speed when a train is coasting. Safety management systems

• Rail lubrication systems—solutions to reduce friction Significant progress has been made over the past between the rail and freight cars, thus requiring less several years in the implementation of safety manage- engine effort to maintain speed. ment systems (SMS). In response to Railway Safety Act Infrastructure Review recommendations, an SMS working group was formed to improve implementation of SMS throughout • Improved track structures—enhancements aimed the rail industry. This working group—consisting of rep- at reducing friction caused by various track features resentatives from Transport Canada, the rail industry (e.g. sharp curves and uneven roadbeds), as well as and railway unions—updated and published an SMS investment in double tracking and siding extensions, Guide, which provides tools and resources that detail which lead to efficiency improvements. how to implement SMS. Included are an accepted definition of safety culture, a safety culture checklist, a list of • Rail lubrication—trackside flange lubricators and best practices for small railways, and guidance on how locomotive-mounted wheel flange lubricators to to integrate the 12 principles of an SMS required by sec- reduce fuel consumption. tion 2 of the Railway SMS Regulations. • Co-production—sharing of tracks to allow for faster and more efficient operations. The combined effect of these initiatives and technologies Jurisdiction of Rail Safety has enabled Canada’s Class I freight railways to improve Railways that cross provincial boundaries are under federal fuel efficiency by approximately 7.3% (CN) and 4.1% jurisdiction. For these railways—including CN, CPR and VIA, and (CPR), increasing both the economic and environmental more than 50 shortline railways—safety is governed by the Railway Safety Act. efficiency of rail operations and contributing to the long- term sustainability of Canada’s rail freight industry. Transport Canada also has agreements with seven provinces to provide inspection services for railways under provincial jurisdiction.

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Transportation Safety Board 12 Principles of Railway SMS Transport Canada has made progress on the 1. Railway safety policy and targets are communicated to employees. Transportation Safety Board’s (TSB) list of issues and related recommendations. 2. Authorities, responsibilities and accountabilities for safety are clearly defined at all levels in the railway. With respect to the auditing and enforcement over- 3. Employees and unions are involved in developing a sight of railway safety management systems, guidelines railway’s SMS. and tools have been developed to assist railways with 4. Systems are in place to identify applicable safety regulations, SMS implementation. exemptions and compliance. In February 2011, Transport Canada began a Canada- 5. A process is established for identifying safety issues and evaluat- wide study of long-train operations. Phase I preliminary ing and classifying risk. results have been submitted and are under review by 6. Risk control strategies exist. Transport Canada, with the objective of developing guidelines for train marshalling and handling. 7. Systems are set up for accident and incident reporting, investigation, analysis and corrective action. On November 11, 2011, revisions to Track Safety 8. Systems are in place to ensure employee training and compliance Rules were approved; these will come into effect on May with all safety requirements. 25, 2012. The revised rules include significant changes 9. Data is collection and analyzed to assess the safety performance to rail testing requirements (based on tonnage and class of the railway company. of track) and address “poor rail surface” concerns. 10. Procedures are followed for internal safety audits, reviews, mon- Of all TSB recommendations (131), 84% have been itoring and evaluations of SMS. fully addressed according to TSB’s assessment. 11. Systems are created for monitoring management-approved corrective actions resulting from SMS process and procedures. armonization 12. Documentation describing the systems for each component of H the SMS is consolidated. In terms of harmonizing rail safety regulations with other nations, Canada’s biggest partner is the U.S. However, in 2011, Canada began working with Mexico to ensure In 2011, Transport Canada completed work on harmonization across North America. Key activities in improving training for Transport Canada SMS auditors 2011 were as follows: to enhance their capacity to assess the safety performance of railway companies. • The creation of the Canada-U.S. Regulatory Cooperation Council (RCC) was announced in early 2011. The mandate of the Council is to better align the Safety performance data regulatory approaches of both countries. Work was The number of railway accidents has been declining initiated towards the development of a Joint Action steadily in Canada over the past decade (see Table S1 Plan to advance the goals of the RCC. and Figure S2). From a high of 1,475 in 2005, the num- • On December 7, 2011 an initial Joint Action Plan ber of railway accidents is now down to 1,023, while was released, outlining initiatives where Canada and fatalities were down to 71 in 2011, from a high of 103 the U.S. intend to seek greater alignment in their in 2005. Most importantly, the accident rate—the num- regulatory approaches over the next two years. Two ber of accidents per million train miles—has been on a initiatives were identified: the alignment of rail safety downward slope, decreasing from 16 in 2001 to 11 in 2011. standards and the establishment of a joint mechanism Between 2007 and 2011, crossing collisions were to conduct periodic reviews of regulations. down 22.5% to reach 169 in 2011, while trespassing • Acknowledging that rail sustains domestic and accidents were down a third to 67 in 2011 (see Tables international trade—a major role for both countries’ S3 and S5). Main track derailments, however, have been economies—the RCC determined that harmonization on the upswing, after sharp declines in 2008 and 2009. of regulatory regimes in the rail sector would enhance In 2011, they reached 103, still one third below levels the efficiency, safety and reliability of this vital mode reported in 2007. of transportation.

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• Transport Canada and the Federal Railroad Sample projects include: Administration (FRA) collaborated in the RCC Rail Safety Bilateral Working Group, tasked with the harmo- • Visual Behaviour and Conspicuity/Effectiveness of nization of the two countries’ rail regulatory regimes. Grade Crossing Elements • Investigation of Intrusion and Obstacle Detection Outreach Systems for Rural and Low Density Rail Grade Crossings Transport Canada’s Rail Safety Outreach program con- • The first volume of a report on a decision support tool tinued its work in education and awareness in 2011. for prioritizing safety improvement programs at high- Based on RSA Review recommendations, the target risk grade crossings audience for the Outreach program is expanding, as the program widens its focus from public education and awareness of trespassing and crossing safety to also include a broad range of rail safety issues for all 8.7 Security stakeholders. To that effect, Transport Canada has hired Several action items in the joint Canada-U.S. Perimeter Outreach officers in each region of the country to target Security Declaration involve rail security elements, as many stakeholders as possible. Transport Canada including the Integrated Inbound Cargo action item, also provides funding to the Railway Association of which strives to streamline the movement of in-transit Canada for Operation Lifesaver, which enables the cargo to and from the U.S. This activity will include pilot Association to create products designed to raise the projects led by the Canada Border Services Agency and general public’s awareness of rail safety. U.S. Customs and Border Protection, and supported by Transport Canada. One of these preliminary projects Innovation will examine the inbound movement of goods along the Prince Rupert–Fort Frances corridor that crosses A research project—led by Transport Canada and Western Canada. involving rail industry stakeholders—is underway to investigate factors that influence track-related failures, with the aim of developing tools, methods and technologies to improve track performance. This research also aims to determine more effective and efficient techniques to monitor and identify track-related defects and potential failure conditions on a network-wide basis. Transport Canada also conducts regular rail-related research to strengthen the safety of Canada’s rail sector. Research results are instrumental in providing science- based evidence to inform forward-looking policies, regulations, standards and codes to improve the safety of the Canadian transportation sector. Much of this research is conducted in a collaborative manner through the Railway Research Advisory Board (RRAB)—an industry/government committee mandated to advance the safety of Canada’s rail industry. The financial contribution from the federal government is leveraged by at least a 50% contribution from industry.

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One million kilometres of roads. Challenges unique to Canada. Balancing the need to invest with the realities of fiscal constraints. 2007–2011 saw a variety of steps taken to support Canada’s competitiveness in a global economy—and to make its roads safer for all Canadians.

9.1 oVERVIEw of Road be limited given current fiscal situations and competition for funding from social sectors such as health Transportation and education. Canada has more than a million kilometres of (two-lane equivalent) roads, roughly 38,000 of which make up the National Highway System (NHS). Please see Addendum 9.2 2011 Year in Review Table RO1 for more information. Road transportation is the most important mode for passenger and freight Economic Framework transportation, local (intra-city) and intercity transportation, intra-provincial transportation activities, and trade and infrastructure between Canada and the United States (in terms of • Canadian for-hire carriers moved 225 billion tonne- value transported). kilometres of freight in 2010, up 8.1% from 2009. Canada’s road network is shared by a wealth of differ- Roughly 139 billion tonne-kilometres (61.5%) were ent users, including 20 million light vehicles, 750,000 carried in the domestic sector and 87 in the interna- medium and heavy trucks, 15,000 public transit buses, tional sector (see Table RO17). motorcoaches and motorcycles in addition to pedes- • By value, road continues to be the dominant mode trians, cyclists and rollerbladers (see tables RO3, RO4, of transportation for moving goods between Canada RO5, RO8, RO11, and RO26). and the U.S. In 2011, 45.1% ($149 billion) of exports Canada faces many challenges relating to its road and 73.5% ($162 billion) of imports were transported transportation infrastructure. Some are unique to the between the two countries by truck, representing country—such as its extensive land mass and often harsh 56.5% of overall Canada-U.S. trade and 42.7% of climate, its high degree of urbanization, and its high level all trade between Canada and the world (see Tables of trade dependency—and some are shared by others, EC6, EC7 and EC11). including an aging road and highway infrastructure, lim- • The total value of Canada-U.S. trade (inbound and ited finances, issues of road safety, and environmental outbound) increased more than 9%, with nearly 82% considerations. These challenges increase pressure for of Canadian road-based exports to the U.S passing more federal, provincial and municipal spending at a through border crossings in Ontario and Quebec (see time when economic and financial circumstances are Table EC-10). forcing all governments to consider new and innovative ways to fund transportation infrastructure. • At the end of 20101 (latest available information), the NHS encompassed 38,069 kilometres of key highway Given the challenges ahead—including maintaining an linkages vital to Canada’s economy and the mobility efficient road transportation system to support Canada’s of Canadians (see Table RO1). While an expansion competitiveness in a global economy—the need for was approved by the Council of Ministers following investment will undoubtedly continue. In coming years, a review of the NHS in 2005, the system of roadways however, government spending at all levels is likely to has not grown significantly since.

1 The 2010 National Highway System Condition Report, prepared jointly by the federal/provincial/territorial NHS Review Task Force on behalf of the Council of Ministers Responsible for Transportation and Highway Safety.

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• 2009 is the most recent year for which road motor –– In Manitoba, an agreement to subsidize Greyhound vehicle fleet information is available. For that year, the services was extended until March 31, 2012. The composition of the motor vehicle fleet was as follows: subsidy is for $3.12 million for fiscal year 2010–11 19.7 million cars, light trucks and vans; and 755,000 and $3.9 million for fiscal year 2011–12. heavy trucks (gross weight of at least 4.5 tonnes). In 2009 the light vehicle fleet generated an estimated –– For its part, Alberta deregulated intercity bus ser- total of 303 billion kilometres, 3.2% more than in 2008, vice on October 1, 2011. while the heavy truck fleet was responsible for an esti- –– Several other provinces are evaluating their options, mated 30 billion kilometres (5% less than in 2008 due while service abandonments2 continue to be mod- to the recession). With close to 20 million light pas- erate. Greyhound, the major carrier, abandoned 12 senger vehicles and more than 22 million licensed low-density corridors and reduced service frequency drivers, this leads to a ratio of more than one car per in others, but early indications of possible replace- household in Canada. Tables RO3 to RO9 provide ment services emerging were positive. more information on Canada’s motor vehicle fleet. • In December 2011, Acadian bus services in New • 90% of consumer expenditures on transportation go Brunswick and Prince Edward Island were halted to private transportation while the remaining 10% is by a strike, and Groupe Orléans (owner of Acadian) spent on public transportation. Vehicle purchases and announced that its French parent Kéolis had expenses account for 88% of Canadian household acquired the remaining 25% interest in the company spending on transportation (see Table EC-76). effective December 31, 2011, making Orléans a wholly- • More than 90% of domestic intercity travel is by car, owned subsidiary. which can be explained by the fact that most (88%) domestic intercity trips are intra-provincial and over Environment short and medium distances. • In 20093 greenhouse gas (GHG) emissions from road • 55.47 million cars and 10.54 million trucks crossed the transportation were 141 Mt CO2e (carbon dioxide Canada-U.S. border, an increase of 8% in car traffic equivalent). Road transportation accounted for 82.5% from 2010 and less than a 1% increase in truck traffic. of domestic GHG emissions from transportation, and Traffic volumes as a whole were 7% higher than 2010 19% of total Canadian emissions (see Figure EN15). levels (see Tables RO19 and RO20).

• On-road freight accounted for 63.7 Mt CO2e, repre- • Public transit continues to grow across the country, senting 37% of Canadian transportation emissions with new major mass-transit infrastructure projects in 2008, while on-road passenger transportation planned in Montreal, Ottawa, Toronto, Edmonton accounted for 77.2 Mt CO2e, representing 45% of and Vancouver, and active transportation is becom- Canadian transportation emissions (see Figure EN16). ing more popular, due in part to the introduction of bicycle-sharing programs in Montreal, Ottawa • Road freight transportation’s share of transportation

and Toronto. air pollutant emissions accounted for 7% of PM2.5 (particulate matter less than 2.5 microns in diameter) • In 2010, bus industry revenues (including government emissions, less than 1% of SO (sulfur oxide) emis- contributions) were estimated at $14.3 billion, a 4.6% x sions, 20% of NOx (nitrogen oxide) emissions, 3% of increase from the previous year. The public transit sec- VOC (volatile organic compound) emissions and 2% tor accounted for 52.5% of total bus industry revenues, of CO (carbon monoxide) emissions in 2009. excluding government contributions (see Table RO21). • Road passenger transportation’s share of 2009 transpor- • The provinces continued to respond to a 2010 federal/ tation air pollutant emissions accounted for 2% of PM provincial/territorial task force report recommending 2.5 emissions, 2% of SOx emissions, 16% of NOx emissions, that jurisdictions relax the regulatory controls on inter- 40% of VOC emissions and 55% of CO emissions. city carriers.

2 Service abandonment means bus routes that were discontinued. 3 The year for which the latest data is available.

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• Under the Passenger Vehicle and Light Truck Decade of Action for Road Safety and Canada’s Road Greenhouse Gas Emission Regulations—which are Safety Strategy 2015. aligned with U.S. regulations—the Canadian government began regulating cars and light trucks from ecurity model years 2011 to 2016. S • In November 2011, Environment Canada published • A number of action items in the joint Canada-U.S. a discussion document on the proposed regulatory Perimeter Security Declaration will involve road approach for GHG emissions from passenger vehi- security elements, including the Integrated Inbound cles and light trucks with model years 2017 to 20254 Cargo action item, which strives to streamline the for a 30-day comment period. movement of in-transit cargo to and from the U.S. This action item will include pilot projects led by the Canada Border Services Agency and U.S. Customs Safety and Border Protection and supported by Transport Canada. One of these pilot projects will examine the • The Motor Vehicle Safety Act was amended in 2011 inbound movement of goods by truck from the Port of to allow used vehicles to be imported from Mexico, Montreal to the U.S. border a change tied to a North American Free Trade Agreement commitment. The Act was also amended to allow residents of Canada to bring rental vehicles 9.3 2007–11 Recap across the border from the United States into Canada for a period of 30 days or fewer for non-commercial purposes (non-Canadians were already able to bring Economic Framework rental vehicles into Canada). and infrastructure • The Road Safety Vision 2010 (RSV 2010), Canada’s national road safety plan, was replaced by the Road A variety of transportation vehicles of different sizes Safety Strategy 2015. With this long-term vision, the and configurations use the Canadian road network, Canadian Council of Motor Transport Administrators including automobiles, buses, motorcycles and trucks. (CCMTA) hopes to make Canadian roads the safest in Vehicles sharing the roads are used for private or com- the world. Key elements of the new strategy include mercial passenger or freight transportation activities. adoption of a more holistic approach to road safety; establishment of a framework of best practice strate- Trucking gies for use by all stakeholders; and measurement of 5 progress at the national level using the most appro- For-hire trucking activity has increased, and in 2011 priate rate-based casualty (e.g., fatalities or serious its real gross domestic product (GDP) was 6.3% higher injuries) measures. than in 2006. Activity slowed during the economic downturn of 2008–2009 (in 2009 it was 5% lower than in • The United Nations has declared 2011–2020 the 2006) but grew strongly in 2010–20116. Employment has Decade of Action for Road Safety, the objective being been slow to recover: in January 2011, for-hire trucking to stabilize and then reduce the forecasted level of employed 2.9% fewer workers than in January 2006.7 road traffic fatalities around the world. If current trends prevail, road fatalities will become the fifth leading The decrease in for-hire trucking activity was evident cause of death in the world. Canada was one of the in both domestic and trans-border traffic, although 8 sponsoring countries for this initiative, which is coor- less severe in the trans-border sector. In 2009 dinated by the World Health Organization. the tonne-kilometres of domestic traffic was 6.3% lower than 2006, compared to a 4.4% decrease in trans- • 2011 was the Year of Road Safety in Canada, and border traffic. several actions and initiatives were introduced to improve road safety and to support the United Nations’

4 http://www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=F24B936F-1 5 For 2011, the value is the third-quarter GDP annualized and seasonally adjusted. 6 GDP from SC # 15-001; employment from SC # 72-002. 7 Owner-operators working under contract for for-hire carriers are not reported as employees. Actual employment (employees plus owner-operators) may show a different trend, depending on the owner-operator numbers. 8 Tonne-km data from Transport Canada’s 2009 Annual Report Addendum, Table RO17.

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Intercity buses The industry’s financial position appears improved, but pressure on regulating provinces to relax controls Until 2009, the commercial intercity bus industry and will continue to be a major theme in Canadian bus regu- the regulatory regime under which it operated appeared lation in the immediate term. stable and indicated modest growth. In return for continuing service on low-density routes, the commercial Curbside intercity bus service is a niche market in intercity industry of most Canadian provinces operated Canada and the United States. Generally, companies under rules that protected carriers from competition in this sector sell tickets on the Internet; use an airline in higher-density markets. Charter and tour operators pricing model; pick customers up at various downtown were largely deregulated and operated under a different curbside locations; and provide more amenities than set of regulations. standard bus services (for example, reserved premium seating, Wi-Fi and snack bars). Coach Canada and In reality, however, low-density rural and small com- MegaBus have entered this market, operating between munity services were catering to markets on the decline Buffalo and Toronto and between Toronto and Montreal. due to more people owning cars and aging populations To serve commuters, Ontario’s GO Transit has recently with fewer travel needs. Bus parcel express services expanded into intercity markets such as Kitchener, St. were a source of revenue for many routes, sometimes Catharines and Peterborough via bus and/or rail service. ensuring profitability, but these have gradually faced increasing competition from the courier industry, reduc- Roads ing the viability of intercity bus services to smaller communities. Since 2006–2007, close to $17.4 billion has been invested in the NHS by all levels of government, with In 2009, Greyhound Canada—the largest Canadian amounts increasing from $2.3 billion in 2006–2007 to intercity carrier—informed the federal government and $4 billion in 2010/2011, peaking at $4.5 billion in 2009– the provinces and territories where it operated that it was 2010.10 These investments from 2006–2010 have been losing money on its low-density routes, and that without used to extend the NHS with pavement rated in good financial support or changes to the regulatory regime, it condition by 12% (2,600 km), and to decrease the length would not be able to maintain current service levels. In of pavement in poor condition by 22% (800 km). During the same year, Groupe Orléans sought permission from this same period, the length of unpaved NHS decreased regulators in Nova Scotia and New Brunswick to reduce by more than 24% (800 km). service on routes driven by its subsidiary, Acadian. Similar developments were observed across Canada to The NHS also has more than 8,700 bridges, 60% of some extent, with the exceptions of Newfoundland and which are more than 30 years old. Due to increased gov- Labrador and Nunavut.9 ernment investments, however, the number of bridges less than 10 years old increased by 16% between 2006 In response to these developments, Canada’s federal, and 2010, from 896 to 1,223. In contrast, aging infra- provincial and territorial governments established a structure remains an issue as the number of bridges 50 task force on intercity bus services. A report released years or older went from 870 to 1,318 between 2006 in September 2010 recommended that individual prov- and 2010, an increase of more than 50%. Since 2007, inces adjust their regulatory regimes to make it easier almost 700 bridges on the NHS have either been rebuilt for carriers to make service changes and for new, alter- or have undergone major rehabilitation. native and replacement services to enter the market. Between 2005 and 2008 (latest available data), total Establishment of the task force led to bilateral discus- travel on the NHS increased by more than 6% (from 119 sions between carriers and provinces, even as the to 127 billion vehicle-kilometres), while truck travel task force was working. In Manitoba, for example, increased by approximately 9% (from 18 to 19.6 billion Greyhound negotiated an agreement with the province vehicle-kilometres). Almost 93% of car travel and 95% in 2010 under which it would continue service in return of truck travel in Canada occurred on the Core National for a subsidy. In several other provinces, carriers contin- HighwaySystem.11 ued to work through the regulatory process.

9 There is no intercity bus service in Nunavut. 10 The 2010 National Highway System Condition Report prepared jointly by the federal/provincial/territorial NHS Task Force on behalf of the Council of Ministers Responsible for Transportation and Highway Safety. 11 Core routes are a subset of the National Highway System and pertain to key interprovincial and international corridor routes, including links to intermodal facilities or major border crossings.

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While the number of collisions on the NHS remained inaugurated during that five-year span. They join other relatively stable between 2005 and 2008, the number of existing services, such as as Ottawa’s 97 Transitway bus injuries per year decreased 10% and fatalities by about line, between the airport, downtown and Bells Corners, 30% over the same period. Toronto’s 197 Rocket connecting Pearson International Airport with Kipling Station, and Winnipeg Transit’s bus Observing 2005–2008 trends, the injury rate for the routes 15 and 20, which both travel between the air- NHS is considerably lower—approximately 50% lower— port and downtown. Edmonton International Airport is than for Canada’s road network as a whole. While the expected to have a bus rapid transit service in place in fatality rate for the Core National Highway System is the spring of 2012. lower than for all roads in Canada, fatality rates on the Feeder and Northern and Remote National Highway Systems are higher than the Canadian average. Environment

Between 1990 and 2008, GHG emissions from light- Land border crossings duty vehicles (LDVs) increased by approximately 14 Mt CO e—approximately 1% per year or 21% overall— The value of two-way trade between Canada and the 2 from 71.7 Mt CO2e to 86 Mt CO2e. This can be attributed U.S. using NHS border crossings decreased by about to population growth and increased passenger activity 18% between 2006 and 2010, while the value of tourism as well as a shift towards less efficient light trucks and crossing the borders saw a modest growth of 2% over sport utility vehicles. From 1990 to 2009, the share of the same period. total emissions generated by air pollutant emissions Current challenges at the border are a result of balanc- from light-duty vehicles declined, in general. Between

ing trade with increased security in a post-9/11 world. 1990 and 2009, PM2.5 emissions fell by around 2,600

The perceived difficulty of importing and exporting tonnes, SOx emissions by 11,443 tonnes, and NOx and goods is mainly related to increased paperwork, bor- VOC emissions by approximately 366,000 tonnes and der delays, costs and regulatory requirements. Some 411 thousand tonnes, respectively; carbon monoxide industries, such as computer and electronic products also fell by around 5 Mt. 12 and aerospace, have been affected more than others. Between 2008 and 2020, GHG emissions from LDVs are forecast to decline by 0.6% annually, representing a

Public transit drop from 86 Mt CO2e in 2008 to 80 Mt CO2e in 2020. Implementation of both the Passenger Automobile and Since 2007, public transit has experienced an upswing Light Truck Greenhouse Gas Emission Regulations for in ridership and activity. Those five years were marked model years 2011 to 2016 and the Renewable Fuels with the opening of a new SkyTrain line, the CanadaLine Regulations account for most of the expected decline. in Vancouver and expansion of Montreal’s subway into However, this estimate does not take into account the Laval. Toronto and Montreal both placed important planned 2017 to 2025 model year GHG emission reg- orders to renew part of their subway’s rolling stock, ulations. Without GHG emissions regulation for LDVs, with Toronto’s new Bombardier trains starting to come total emissions from LDVs would rise over the same into service in July 2011. Calgary saw an expansion of period from 86 Mt CO2e to 89 Mt CO2e. Also during the its C-Train network with the opening of the McKnight 2008–2020 period, GDP is expected to grow by 1.9% (2007) and Crowfoot (2009) stations. Two additional sta- and population by 0.9% per year—or 25% and 12% tions are planned to open in 2012. overall, respectively. Meanwhile, there has been an increased connectiv- From 1990 to 2008, GHG emissions from medium- and ity between public transit and airports, to the benefit of heavy-duty vehicles (M/HDV) increased by approxi- travellers, meeters and greeters, and airport employees. mately 27 Mt at an average of 3.9% per year—or 96% Vancouver’s CanadaLine, as well as Calgary’s Route 300 overall—increasing from approximately 28 to 55 Mt. Bus Rapid Transit and Montreal’s 747 bus line, are all This can be explained in part by the growing share of examples of new direct public transit access to airports freight being moved by trucks.

12 Statistics Canada (2008). Canada-U.S Border Survey.

2011Transportation in Canada 95 9 Road Transportation

HDVs contribute primarily to NOx emissions and only of driving safely. marginally to other air pollutant emissions. All HDV- related air pollutant emissions fell significantly from Between 2007 and 2011 some 2,157 vehicle recalls 13 1990 to 2009 period: PM emissions by 13,196 tonnes; were announced , or on average 431 per year. 2010 2.5 alone saw a record 468 recalls. SOx emissions by 21,079 tonnes; NOx and VOCs by 88,496 tonnes and 43,302 tonnes, respectively; and CO emissions by 695,934 tonnes. Security

Starting with model year 2007, HDV engines were Increased security requirements at the border have led required to meet the 2007–2010 emission standards in to complaints about longer wait times. Both Canada and the On-Road Vehicle and Engine Emission Regulations the U.S. have responded in a number of ways, includ- that fall under the Canadian Environmental Protection ing upgrading and adjusting infrastructure; increasing Act 1999. These are aligned with U.S. regulations. On staffing levels; implementing technological solutions; May 21, 2010, Canada and the United States each rebalancing finite resources; and initiating programs to announced that they would regulate GHG emissions expedite low-risk goods and travellers. Efforts continue from new on-road HDVs, with the proposed Canadian to be made to standardize and improve the collection regulations also being harmonized with those of the U.S. and dissemination of border wait times. On October 25, 2010, the U.S. released proposed regulations to reduce GHG emissions from new on-road 9.4 Economic Framework HDVs of 2014 and later model-years. On the same day, the Government of Canada released an initial consulta- and infrastructure tion document to seek early stakeholder views. Trucking Safety The trucking industry, which includes 56,800 firms, Road Safety Vision 2010 (RSV 2010) was Canada’s consists of for-hire14 carriers, private15 carriers, owner- national road safety plan from January 2002 to operators16 and courier17 firms. Another trucking December 2010, and the overall quantitative target of category of “other” includes all trucks used for purposes the plan was to reduce during this period the average other than hauling freight commercially—for example, a number of road users killed or seriously injured in traffic construction company using trucks for hauling heavy collisions by 30% or more. The provinces and territories machinery to a job site. engaged in a number of initiatives to raise awareness and improve road safety in their jurisdictions. A mid- Fleet size, equipment type, geographic scope of term review of RSV 2010 prompted most jurisdictions to operations, service type and type of freight carried develop new initiatives or increase their efforts in three all differentiate trucking firms. Results from Statistics major road safety areas: drinking and driving, non-use Canada’s 2010 Annual Trucking Survey18 show that the of seat belts, and speeding/aggressive driving. A sum- national fleet in 2010 included 121,000 road tractors, mary report of RSV 2010’s progress will be completed 61,000 other power units and 302,000 non-powered once final road-safety data from all provinces and ter- units such as trailers, vans and flat beds. ritories becomes available. Trucking firms employed 201,000 persons in 2010, Since 2008, Canada has held the annual National including 128,000 salaried drivers, and an additional Day of Remembrance for Road Crash Victims on the 54,000 owner-operators. Wednesday following the third Sunday in November. The Annual Trucking Survey also indicated that the This day helps Canadians remember and pay their trucking industry reported $40.8 billion in operating rev- respects to those who have died or been affected by enue in 2010, a 4.9% increase from 2009. Operating road crashes, and reminds Canadians of the importance expenses were up 4.6% to $37.9 billion. The increase

13 This includes tires and car seats, although the number of recalls for these products is very low. 14 For-hire means hauling freight for compensation. 15 Companies hauling their own freight. 16 Individuals who own and operate their own trucks and operate as independent for-hire truckers, hauling trailers for other carriers or directly for a shipper. 17 Couriers operate trucks for delivering same-day, overnight or later letters and parcels. 18 see CANSIM tables 403-0008 to 403-0015 at http://www5.statcan.gc.ca/cansim/a03?lang=eng&pattern=403-0008..403-0015&p2=31

96 Transportation2011 in Canada Road Transportation 9 in operating expenses was led by vehicle fuel expenses or moving through these areas. The trans-border truck- (up 12.2%), followed by insurance premiums (up 5.9%) ing industry continues to face challenges associated and salaries, wages and benefits (up 5.6%). The indus- with the increased security measures implemented try’s operating margin increased 10.0% to $2.9 billion. after 9/11—measures that often result in border delays and additional regulatory requirements that increase The 4,800 largest businesses (those with annual industry costs. While these factors are challenging, car- operating revenue of $1.3 million or more) recorded a riers have a history of thriving by adapting to changing 6.0% increase in operating revenue and a 4.5% rise in circumstances. operating expenses, while the remaining smaller firms reported a 2% increase in revenues and a 4.7% growth In 2011, some large trucking firms continued to con- in expenditures. solidate their business activities through acquisitions and mergers. For example, TransForce Inc., which owns Long-distance trucking firms reported $26.7 billion in Canada’s largest truck fleet, continued to increase and operating revenue, up 3.0%, while local trucking busi- diversify its business activities in 2011 mostly through nesses reported revenues of $14.1 billion, up 8.8% in a acquisitions in the package and courier business. year. Domestic freight movements accounted for 77% TransForce acquired the Canadian operations of DHL in of total revenues, with the remainder split almost evenly spring 2011. It is expected that TransForce will continue between transborder import and export movements. to grow, as the company is looking for more acquisitions Pressures that have shaped the trucking industry south of the border. recently will continue for at least several more years. To remain competitive, truck carriers must continue to Long combination vehicles find operational efficiencies to offset rising input costs, as tightening environmental regulations will likely lead In Canada, any combination of vehicles more than 25 to more expensive trucks, fuel costs will continue to metres in overall length is considered to be a Long climb, and higher environmental, safety and techni- Combination Vehicle (LCV). The LCV truck configura- cal standards will require improved equipment and tion was introduced more than 25 years ago in Nova procedures. Increasingly stringent safety and security Scotia, New Brunswick and Ontario; as a result, LCVs requirements may shrink the pool of potential drivers, are now allowed on some roads in all provinces/territo- which is problematic as recruiting and retaining quali- ries except Newfoundland and Labrador, Prince Edward fied drivers is already difficult when demand for trucking Island, the Yukon and Nunavut. The federal-provincial- is strong. Road congestion in urban areas is growing territorial memorandum that defines Canada’s nationally and creating delays for freight originating, terminating accepted trucks was amended three times19, introducing, among other things, an exemption for a “boat tail” aerodynamic device up to two feet long (when measuring the length of a truck), an exemption for an auxiliary Jurisdiction of trucking in Canada power unit (when measuring the weight of a truck), Trucking is mainly under provincial and territorial jurisdiction. and an increase in the maximum weight permitted on Interprovincial and international trucking services fall under fed- a wide-base single tire to match U.S. levels. Common eral jurisdiction, while operations run solely within one jurisdiction fall under that jurisdiction’s authority. Contrary to other modes of configurations of LCVs observed in Canada include a freight transportation, the federal government’s role in trucking is tractor pulling: limited when it comes to regulation and policy. This stems from the fact that most roads used by trucks are owned and maintained • two long trailers 48’ (14.6 m) or 53’ (16.2 m), called by provincial, territorial or local governments, and that in 1954 the Turnpike Doubles; federal government delegated its responsibility under the Motor Vehicle Safety Act for regulating extra-provincial truck operators to • one long 48’ or 53’ (14.6 m or 16.2 m) trailer (14.63 m the provinces. The federal government has an interest in trucking or 16.15 m) and one short 28’ or 28.5’ (8.5 m or 8.7 m) vehicle standards under the Motor Vehicle Safety Act, in the trans- trailer, called Rocky Mountain Doubles; or portation of dangerous goods, and with respect to its responsibility for international road border crossings with the United States. • three short 28’ or 28.5’ (8.5 m or 8.7 m) trailers, called Triples.

19 In 2008, 2009 and 2011.

2011Transportation in Canada 97 9 Road Transportation

While triple trailers are still common in the United Intercity scheduled bus operators are competing with States, their popularity has decreased in Canada. air and passenger rail transportation in markets where The LCV configuration currently observed is primar- bus is a reasonable alternative; competition with tran- ily Turnpike Doubles, used only on divided four-lane sit is confined to the longer-distance commuter market highways and found in British Columbia, Alberta, surrounding larger cities. Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia. Rocky Mountain Doubles In most of Canada, the intercity bus passenger base is are used on both divided four-lane routes and some heavily weighted towards youth, the elderly and the eco- designated two-lane highways in British Columbia, nomically disadvantaged. In 2010, a survey conducted Alberta, Saskatchewan, Manitoba and the Northwest for the Canadian Bus Association—which represents the Territories. While still legal in Quebec, they are not a major carriers—established that 30% of its riders were popular choice. students and children, while another 25% were older than 55. Almost 40% were from households with an LCV permits specify the conditions under which annual income of less than $25,000, and less than 40% LCVs are allowed to operate; for example, with a set of had access to a car on the day of the survey. Surveys equipment upgrades20; highways on which they can be from the 1990s and earlier show comparable results. driven; time of day/of year they can be driven21; weather conditions; stringent driver qualifications; and speed On the surface, both intercity and charter operators restrictions. The completion of continuous four-lane serve discretionary travel markets. This is especially true highways across the Prairies and within New Brunswick for charters, where tourism is a major source of rev- and Nova Scotia has increased the attractiveness and enues—particularly for high-end coach charters and for feasibility of longer distance, interprovincial LCV opera- urban tour bus operators on a seasonal basis. Most riders tions. Provincial and territorial governments are working use intercity bus travel for personal reasons (for example, to harmonize conditions contained in special permits visiting friends and family). Much of this casual travel is issued for the operation of LCVs. also seen in personal automobile use, reflecting the fact that many bus travellers do not have access to a car. On the charter side, market fluctuations tend to directly Intercity buses echo the state of the economy; the intercity market is steadier, but the passenger base is static or shrinking. Approximately 1,500 bus service operators currently exist in Canada. Bus transportation industry group- The challenge for operators in the intercity market ings include urban transit systems, interurban and is to attract a wider spectrum of users to expand the rural bus transportation (scheduled intercity), school market. However, the industry has been slow to reinvent and employee bus transportation; charter buses; other itself, even in markets like the United States where it has ground passenger transportation (shuttle); and scenic/ been deregulated since the early 1980s. sightseeing transportation. Urban transit is the largest In recent years, some see the rapid growth of curbside segment22 of the bus transportation industry, followed bus service in the United States as a sign of industry by the school bus segment, intercity bus operations and regeneration. This service typically operates between the charter/tour bus segment. downtown city pairs, relies on web-based ticket sales, The commercial bus industry consists of several and—as the name suggests—does not use fixed bus somewhat distinct markets, the two most important terminals. In the U.S. it has had some success in attract- being intercity and charter/tour. The intercity and char- ing business travel, and in some markets it has built a ter/tour markets have different passenger bases and routine client base. However, it is unclear how large the service patterns. Intercity operators predominantly use potential market may be for this type of service. motor coaches, and while many charter carriers do as well, they also use smaller buses and a range of specialized equipment.

20 Engine retarder or driveline retarder (hydraulic type) with minimum rated retardation horsepower capacity; a maximum gross weight-to-power ratio of 150 kg per one horsepower; adequate gearing and powering of the power unit to be able to maintain speeds on level ground; and an anti-lock braking (ABS) system. 21 Operating restrictions in or through urban areas during rush hours, at the start and end of long weekends. 22 The term “segment” refers to the main activity of a company. The industry can also be looked at in terms of lines of activities. So a company can be in more than one line of bus activities (urban transit, school bus, intercity operations, charter and tour operations); its segment will be its main line of activity, i.e., the one generating the largest share of its total revenues.

98 Transportation2011 in Canada Road Transportation 9

The curbside concept is already familiar in some The vast majority of Canadian highways, including the Canadian markets (e.g., MegaBus service between NHS, fall under provincial, territorial or municipal juris- Montreal and Toronto), but the application is likely to diction, so these governments are mainly responsible be limited as it requires large-population city pairs—of for the planning, design, construction, operation, main- which Canada has few—and minimal economic regula- tenance and financing of the road network, including tion to work successfully. In Canada, the expansion of placing tolls on roads and highways within their jurisdic- curbside bus services is constrained by entry control in tions. Highways running through national parks as well most of the country, making it difficult for new players as a section of the Alaska Highway are the exceptions to enter the intercity bus market. However, the situation to this. While more than 95% of the NHS is owned and may change in some provinces; for example, a federal/ operated by provincial and territorial authorities, NHS provincial/territorial task force report in 2011 recom- highways through national parks and a section of the mended that jurisdictions relax regulatory controls on Alaska Highway account for another 3%; the remaining intercity carriers. In October, Alberta became the first 2% fall under municipal jurisdictions. large province to completely deregulate its intercity bus service. Other provinces are also evaluating their options As of 2010, the NHS encompassed more than 38,069 and may move towards a more deregulated regime. km of key highway linkages that are vital to both the economy and mobility of Canadians, and is comprised The intercity bus industry has taken concrete steps to of three categories of routes, each defined by specific improve vehicle accessibility for those who are mobility criteria that can be used to assess route eligibility: challenged. An intercity bus working group consisting of the Canadian Bus Association, Motor Coach Canada, • Core Routes: key interprovincial and international cor- l’Association des propriétaires d’autobus du Québec, ridor routes (including links to intermodal facilities and Greyhound Canada and Orléans Express recently col- important border crossings). laborated to update the Intercity Bus Code of Practice. • Feeder Routes: key linkages to Core Routes from The Code establishes the standards for accessible population and economic centres (including links to intercity bus services for persons with disabilities, and intermodal facilities and important border crossings). contains new accessibility provisions that include the following: confirmation of reservations for accessible • Northern and Remote Routes: key linkages to Core services; public announcements and signage; courtesy and Feeder routes that provide the primary means of seating on buses and in terminals; relieving areas for ser- access to northern and remote areas, economic activ- vice animals; carriage of mobility scooters as baggage; ities and resources. the use of lifts and ramps; boarding and disembarking Compared to other developed nations, highway and at flag stops; accessibility of websites; and consultation bridge tolls in Canada are limited; at the end of 2011, the with persons with disabilities. country had 15 bridges, one international border cross- Greyhound Canada has designed a ramp to help bus ing tunnel and three road segments that were tolled (see operators load heavy mobility aids such as scooters Addendum Table RO2A). In addition to a small handful into the baggage compartment. There is also a growing of domestic bridges, all international bridge crossings trend of intercity bus operators using low-floor buses, between Canada and the United States are tolled; which allow level boarding entry and eliminate the need domestic toll bridges include Confederation Bridge for wheelchair lifts. Intercity bus operators also offer free (between Prince Edward Island and New Brunswick) transportation for personal care attendants accompany- and two in the greater Halifax region. A notable example ing persons with disabilities. of a toll road is Highway 407 (owned and operated by a private consortium) in the Greater Toronto Area (GTA). Infrastructure Over the last 20 years, the largest share of transportation infrastructure funding has been for new Canada has more than one million kilometres of two- construction, while only a small portion has gone toward lane equivalent roads, 40% of which is paved; a subset rehabilitation work. In the case of highways and roads, of these roads has been designated as the National new construction consistently accounted for about 80% Highway System (NHS)—a network that is important from of investment budgets, leaving 20% for road network a national, regional and northern and remote perspective. rehabilitation.23 The distribution of funding for bridges and overpasses was similar to that for highways and

23 Statistics Canada. http://www.statcan.gc.ca/pub/11-621-m/11-621-m2008067-eng.htm#t1 and http://www.statcan.gc.ca/pub/11-621-m/11-621- m2006035-eng.htm

2011Transportation in Canada 99 9 Road Transportation roads during the 1990s, although rehabilitation of these Federal bridges assets has consumed a larger share in recent years—up to 30%. The Constitution Act gave provincial and territorial governments jurisdiction over infrastructure works such The federal government invests in highway and as highways and—by extension—bridges, with the road infrastructure through federal funds administered exception of international or interprovincial structures. by Transport Canada and Infrastructure Canada. All Despite these constitutional provisions, the federal gov- land border crossings and most international bridges ernment has an inventory of some 500 highway-related are owned or operated by the federal government bridges open to the public, representing a very small directly or indirectly via Crown corporations or operat- subset (approximately 1%) of all bridges in Canada. ing authorities. The Canadian government (through the These bridges are the responsibility of four federal Federal Bridge Corporation Limited, FBCL) also owns departments/agencies: Public Works and Government and maintains several strategic assets in Quebec. FBCL Services Canada, Parks Canada Agency, the National also oversees and manages the Canadian portions of Capital Commission (which owns and operates its several international bridges, including the Thousands own structures) and Transport Canada, whose port- Islands Bridge, the Seaway International Bridge and the folio of bridges is managed by Crown corporations or Sault Ste. Marie International Bridge. shared governance regimes (FBCL, Blue Water Bridge The rest of Canada’s road network, basically its vast Canada, Buffalo and Fort Erie Public Bridge Authority majority, is under provincial, territorial and municipal [Peace Bridge Authority] and the St. Lawrence Seaway jurisdictions, and the federal government’s policy role Management Corporation). is limited to promoting road safety and developing stra- The FBCL, together with its three subsidiaries—the tegic highway and infrastructure policies that support Jacques Cartier and Champlain Bridges Incorporated, the best possible transportation system. Over the years the Seaway International Bridge Corporation, Ltd. and the Government of Canada has provided cost-shared St. Mary’s River Bridge Company—owns, manages funding for constructing and expanding portions of and operates several important bridges in Ontario and the NHS and some local roads through various Quebec. In 2011–12 the FBCL was responsible for funding programs. more than $216 million in operating and capital fund- The role of provincial and municipal governments is ing used on major multi-year projects such as the Sault to build, maintain and operate highways, roads and Ste. Marie customs plaza rehabilitation; the new low- streets. In areas of provincial and municipal jurisdic- level North Channel Bridge in Cornwall; the Honoré tion, public asset ownership has expanded as road Mercier Bridge rehabilitation in Montreal; the third year and highway networks have grown; public spending of the major repair program of the Champlain Bridge in has increased accordingly to support this network. For Montreal; and the first of a three year safety repair and example, in 1996 the length of public roads (both paved asset preservation program in Montreal on Highway and unpaved) was estimated at 900,000 km, while in 15, the Bonaventure Expressway, the Jacques Cartier 2008 it was estimated at 1,042,300 km, representing a Bridge, the Honoré Mercier Bridge, the Melocheville 15.8% growth. Together, all levels of government spent Tunnel and the Champlain Bridge Ice Control Structure. $28.9 billion on roads and highways in 2009–10, almost On October 5, 2011, the Government of Canada 80% more than just five years ago. announced that it will proceed with the construction of After several years of heightened spending to meet a new bridge over the St. Lawrence in the vicinity of transportation needs and to counter the effects of the the current Champlain Bridge in the Montreal area. The economic crisis, governments across Canada, includ- existing six-lane bridge is 50 years old and is the busi- ing the federal government, have turned their attention est bridge in Canada, with estimated annual totals of 11 to managing or reducing deficits. Limited government million public transit commuters, 60 million trips and $20 spending will intensify competition between various billion of international trade crossing the bridge. Over sectors (e.g., transportation, health, education and the coming months, the government will hold important environment) for increasingly scarce resources. In addi- discussions with partners to determine the most effec- tion to public sector deficits and debt, the economic tive and efficient way of moving this project forward. downturn has also constrained the availability of private Further upstream from the existing Champlain Bridge capital to fund transportation projects. will be a new bridge over the St. Lawrence Seaway Many jurisdictions are beginning to investigate or constructed as part of the Highway 30 completion consider alternative means of financing public infra- project. This $2.5-billion project will be financed by the structure—including roads and highways—such as tolls, Government of Quebec ($1.84 billion) and the federal other user charges and public-private partnerships. government ($704.5 million), and will act as a bypass

100 Transportation2011 in Canada Road Transportation 9 around the Island of Montreal, helping reduce road con- assessments ever undertaken in Canada, the project gestion. The new highway will facilitate access to markets received environmental clearances in both Canada and in Ontario, the Maritimes and the U.S. by improving con- the United States as well as the support of communities, nections between Highways 10, 15, 20, 30, 40 and 540. private sector users and governments in both countries. The western part of the project involves building a The project includes a new six-lane bridge; the 11-km four-lane divided highway (a two-lane carriageway in Windsor-Essex Parkway (connecting Highway 401 to the either direction) over a span of 42 km between Vaudreuil- new bridge); state-of-the-art inspection plazas on both Dorion and Châteauguay; it also includes a 1,860-metre sides of the border; and highway connections to U.S. bridge over the St. Lawrence River and a 2.55-km bridge interstates 75 and 94 in Michigan. The new DRIC/NITC across the St. Lawrence Seaway at the Beauharnois crossing will serve to handle the anticipated growth in Canal. The western part of the project is being built trade and volumes of trade traffic that will be using the under a public-private partnership between Quebec and Windsor-Detroit crossing. Nouvelle Autoroute 30, S.E.N.C., a private partner, an arrangement chosen for several reasons, including cost, Construction of the Windsor-Essex Parkway began in construction timetable and risk management. 2011, with the Government of Canada—which is partnering with the Ontario government on this project—funding The federal contribution to the project, which will cover up to 50% of the eligible capital costs. the cost of the bridge, is the largest contribution ever made by the federal government to a road infrastructure The new crossing will be publicly owned and is project. This funding is managed through a contribution expected to be built using a public-private partnership agreement under the Building Canada Fund signed on (P3). Given the importance of this new crossing to the March 24, 2011 with the Government of Quebec. economic security and future prosperity of both Canada and the U.S., the federal government has indicated to Construction on the western part of the project began Michigan that it is prepared to increase its financial par- in February 2009, and it is expected that the 42-km ticipation in this project, up to a maximum of US$550 stretch will open in December 2012, completing the work million; this increased financial participation is for proj- on Highway 30 between Vaudreuil-Dorion and Candiac. ect components in Michigan that would not be funded by the P3 or the U.S. government. Another bridge project spearheaded by the federal government is the construction of a new bridge in the In Canada, all non-bridge international crossings Windsor-Detroit area. The Ambassador Bridge, which are built, owned and operated by the Canada Border links Windsor to Detroit, sees 25% of all Canada- Services Agency (CBSA). Where bridges or tunnels form U.S. trade, making it—and is the busiest commercial part of the crossing and a toll or other charge is pay- land border crossing in North America. Hundreds of able, the owner or operator of the bridge or tunnel is thousands of Canadian jobs depend on the ability of responsible for the construction and maintenance of manufacturers and shippers to efficiently move goods at CBSA inspection facilities associated with the crossing, this critical corridor. Trade moving through the Windsor- free of charge.24 Detroit gateway is expected to continue increasing well into the future. A secure and efficient Windsor linkage is and border crossings and will remain vital to the current and future economies L of both countries. In 2011, 10 of the 20 largest border crossings in Canada The Detroit River International Crossing (DRIC) proj- recorded higher truck traffic from the previous year, ect, referred to in Michigan as the New International while truck activity at Canada’s busiest border crossing, Trade Crossing (NITC)—has been in development by the Ambassador Bridge, decreased by 2.0% from the Transport Canada for more than a decade. Following previous year. one of the most extensive transportation environmental

24 Section 6 of the Canada Customs Act (R.S.C. 1985.c.1 [2nd Supp.]).

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Nearly 73% of Canada-U.S. trade (by value) car- Prior to the Games, and after months of plan- ried by trucks took place at six border crossings: ning, the OPTT released its 2010 Olympic Integrated Windsor (Ambassador Bridge), Fort Erie (Peace Bridge/ Transportation Plan with the goal of reducing vehicle Queenston-Lewiston Bridge (combined)), Sarnia traffic to the downtown core by at least 30%. Measures (Bluewater Bridge), as well as Lacolle, QC, Emerson, taken include: (1) discouraging use of private vehicles; MB, and Pacific Highway, BC (see Table EC10). The (2) increasing public transit service in Metro Vancouver top 10 border crossings process more than 91.5% and the Sea to Sky region; (3) using dedicated pedestrian of truck traffic. The composition of goods carried by corridors along key routes to move people; (4) extending truck varies by region and by border crossing, but the parking restrictions; (5) introducing curbside stopping top five imports and exports carried by truck in 2011 and turning restrictions; (6) prohibiting spectator parking were: machinery and electrical equipment (29.5% of at venues; and (7) offering free secure bicycle parking imports and 19.7% of exports); other manufactured at venues. and miscellaneous goods (16.4% of imports and 20.1% of exports); plastics and chemical products (11.4% of During the Games, TransLink reported a large increase both imports exports); automobiles and other related in transit ridership: bus ridership increased by 34%, materials (19.2% of imports and 17.7% of exports); and and ridership for the SeaBus and Canada Line dou- agricultural and food products (9.3% of imports and bled, while ridership on the Expo and Millennium Lines 11.8% of exports) (see Table RO18). SkyTrain increased by 54%, and West Coast Express by 78%.25

Urban transportation After the Games, the City of Vancouver highlighted the success of the Plan with the following figures that Lower-mainland British Columbia further demonstrated the willingness of Vancouverites to use alternate modes of transportation rather than pri- Vancouver 2010 Winter Olympic Games legacy vate vehicles: The Vancouver 2010 Winter Olympic Games were the • The transportation network accommodated 44% largest and logistically most complicated event ever more person trips to and from downtown. held in Metro Vancouver. An estimated 5,500 athletes and officials from more than 80 countries, 10,000 media • Walking, cycling and transit to downtown more than members, 25,000 volunteers and 1.6 million event ticket doubled over 24 hours. holders travelled between different Olympic sites and • Vehicle trips to and from the downtown core decreased created additional demand on the road system. Olympic by 29%. Lanes were implemented to support Games-related traffic demand, which consequently took away road • Average vehicle occupancy to and from the down- capacity for general traffic. Several roads were closed town core increased by 14% over 24 hours. due to security reasons and some corridors were converted to dedicated pedestrian-only lanes, which further • Almost 80% of spectators at downtown venues reduced road capacity. As a result, the road capacity to walked, cycled or took transit. and from downtown core was reduced by up to 50%. • More than 350,000 people used the downtown pedes- 26 In preparation, the Olympic and Paralympic trian corridors during business days. Transportation Team (OPTT) was formed to develop Wanting to leave Vancouver with a lasting legacy of an integrated transportation plan for the event. The transportation, many of the initiatives implemented dur- OPTT was a multi-disciplinary team consisting of the ing the games have been continuously pursued by the Vancouver Organizing Committee (VANOC), the City of agencies comprising the OPTT. For example, the City Vancouver, Resort Municipality of Whistler, TransLink, BC of Vancouver has established a permanent screen line Transit, B.C. Ministry of Transportation and Infrastructure, count program for vehicles, bicycles and pedestrians in Vancouver Integrated Security Unit, City of Richmond, and out of the downtown core, as part of the City’s con- District of West Vancouver and Transport Canada. tinued effort to monitor transportation usage by mode

25 TransLink (2010). Moving the World: Record numbers ride transit in Olympic Week 1. 20 Feb 2010. http://www.translink.ca/en/About-Us/Media/2010/ February/Moving-the-World-record-numbers-ride-transit-in-Olympic-Week-1.aspx 26 City of Vancouver (2010). 2010 Winter Games: Transportation. 17 November 2010. http://vancouver.ca/2010games/transportation.htm

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TransLink recorded a large increase in transit use Fare cards from 2006 to 2010. The number of boardings—defined as each time a person boards a transit vehicle—for the Rechargeable fare cards are not a new concept in public transit, West Coast Express increased 21.7%, from 2.29 million but their use has substantially increased in the past few years. The Société de transport de l’Outaouais was the first transit operator to in 2006 to 2.78 million in 2010. The West Coast Express introduce the cards in Canada in 1998. In 2008, Montreal introduced is the interregional community railway that links Metro the OPUS card, which let riders carry multiple fares on a single card. Vancouver with Mission, Maple Ridge, Pitt Meadows, In 2009, Metrolinx introduced the PRESTO fare card and began Port Coquitlam and Port Moody. In 2010, the Expo and rolling it out to eight transit authorities across the GTHA. In addi- Millennium Lines recorded more than 79.2 million board- tion, PRESTO is accepted at 12 Toronto subway stations and should ings, a 14.1% increase from 2006. The Expo, Millennium be accepted throughout the Toronto Transit Commission network by 2015, in time for the Pan-American Games. Translink in Vancouver and Canada Lines comprise the automated light rapid plans to introduce a smart card named Compass in 2013 as part of transit system; the Expo Line links Vancouver, Burnaby, its $171-million electronic faregate project; Compass will work on New Westminster and Surrey, while the Millennium Line buses, the SkyTrain, the SeaBus as well as West Coast Express com- shares its tracks from Vancouver to New Westminster, muter trains. The faregate project will receive $30 million in federal then continues along its own route through North funding and $40 million in provincial funding. Burnaby and East Vancouver. The Canada Line also registered 38.4 million boardings in 2010, reaching this level of ridership three years before originally forecast. and to collect data to support its ongoing transporta- The Canada Line connects Vancouver, Richmond and tion planning purposes. This data could assist in policy the Vancouver International Airport (see map). decision-making, and promote innovative initiatives to encourage sustainable travel. Furthermore, TransLink— the region’s transportation authority—is continuing its efforts to reduce overall traffic with TravelSmart, a program that helps businesses and residents of Metro Vancouver make smarter travel choices and reduce single-vehicle-occupancy trips. TravelSmart includes an Employer Pass Program, ridesharing, car sharing, bicycling, walking and telework. TransLink also works in partnership with ticket sales and distribution companies to include transit fares at a discounted rate within the price of event tickets. Other initiatives currently under review by the OPTT agencies for implementation include extending bus lane hours and the public bike system. Extending bus lane hours will help ensure faster and more reliable travel time for a longer portion of the day, while extending the public bike system would provide an alternative to driving and could reduce congestion. During the Games, The population of Metro Vancouver is expected to much expanded transit services and a large fleet of grow to 3.4 million by 2041, with the greatest increases high-quality, public-use bicycles were extremely popu- expected in Surrey, Burnaby, Coquitlam and Vancouver.28 lar with the general public. The $1.4-billion Provincial Transit Plan announced in 2008 included plans for new transit routes in Metro Growing population, growing urban transit Vancouver. Construction on the Evergreen Line—a proj- demand in Metro Vancouver ect jointly funded by the Government of Canada (up to According to BC Stats, the Metro Vancouver region $416.7 million), the Government of British Columbia grew to 2.37 million people in 2010, a 7.98% increase ($410 million) and TransLink ($400 million)—will begin from the 2.19 million reported in 2006—a rapid popula- in summer 2012, with full operation scheduled for 2016. tion growth that has led to increased demand on the The University of British Columbia and Surrey Lines transit network.27 (refer to the dotted lines on the map above) remain in the conceptual evaluation stage.

27 Greater Vancouver Regional District (2007). 2006 Census Bulletin #1: Population and Dwelling Counts. 28 Metro Vancouver (2009). Metro Vancouver 2040–Backgrounder. Metro Vancouver Residential Growth Projections. http://www.metrovancouver.org/ planning/development/strategy/RGSBackgroundersNew/RGSMetro2040ResidentialGrowth.pdf

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Southern Ontario Ontario, both independently and in collaboration with a number of municipalities—and in some instances The safe, secure, clean and efficient movement of with federal funding support—continued to address goods in Ontario—most notably in southern Ontario—is the issue, actively advancing local transit planning and of critical importance to industry stakeholders and all investments, and researching ways to improve the effi- levels of government due to the significant volume of ciency of people and goods movement in the region. goods moving throughout this area. With this in mind, considerations relating to linkages between the move- At the provincial level, Metrolinx—the provincial ment of goods, transportation infrastructure, congestion agency responsible for transportation planning in the and environmental impacts were at the forefront of gov- Greater Toronto and Hamilton Area (GTHA)—released ernment, industry and public examinations in 2011. its GTHA Urban Freight Study in 2011, which proposed a number of actions to improve the efficiency of goods Local municipalities with responsibilities for providing movement in the region. Metrolinx also launched a the infrastructure that services goods-movement trans- related study with input from academia and other levels portation hubs are examining their land-use planning and of government to advance the collection of goods- transportation master plans to find ways to better facili- movement data in the region. tate movement of goods via all modes. Nevertheless, truck transportation remains the main mode of freight With the involvement of Metrolinx—the provincial transportation used in this region. Many municipalities government-mandated regional transportation agency— continue to actively develop and budget for various and its operating division, GO Transit rapid transit timely and strategic investments in fields such as signal- bus lanes are being developed on selected arterial ling, roadway improvements, policy harmonization and roads in the Regional Municipality of York and the City route maps, all with the aim of supporting the movement of Mississauga. of goods. In Toronto, the province and the Mayor agreed to a In 2011, the Ontario government maintained its strat- revised transit plan with the province (via Metrolinx) egy of planning for further improvements to its 400-series being responsible for developing the Eglinton Light Rail highways and studying key corridors—including those Transit line, and the City being responsible for devel- in the Greater Toronto Area West, Niagara and South oping an extension of the Sheppard subway line—for Simcoe areas—with the objective of facilitating more which the Mayor is hoping to attract private investment efficient inter- and intra-provincial movement of goods. to cover much of the costs. Discussions with industry and all levels of govern- Metrolinx, via its operating division GO Transit, contin- ment have also led to changes in weight and dimension ued to acquire additional rail corridors in 2011 and now restrictions, limits on how many hours drivers can work, owns approximately 61% of the track on which it oper- vehicle speed limitations, and the introduction of long ates. Metrolinx also continued to develop an Investment combination vehicles (LCVs), which consists of a truck Strategy, which must be tabled by June 2013, aimed at tractor pulling two or three trailers. identifying a stable and predictable capital and operating revenue stream to support full implementation of its The Regional Municipality of Peel, with its heavy Regional Transportation Plan, The Big Move. concentration of jobs in goods-movement transport, warehousing, and related industries, has established Metrolinx also launched an exercise in 2011 that will a Goods Movement Task Force. All levels of govern- refine The Big Move to reflect progress made since its ment and the private sector are participating to develop 2008 release, and that will enable full integration of GO options for the Regional Council to consider to address Transit’s Strategic Plan, GO2020. Metrolinx is aiming to issues and opportunities pertaining to the movement of release The Big Move 2.0 in 2012. goods in and around the GTHA. The Cities of Ottawa and Hamilton, as well as the Greater Toronto and Hamilton Area (GTHA) Regional Municipality of Waterloo, continued planning for their respective intended light rail transit Gridlock in larger urban centres remained a key economic, systems in 2011, while passenger rail services between transportation and environmental issue for Ontario in Peterborough and Toronto remained under active study. 2011, most notably in the GTHA. The Government of

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Montreal Urban transit in the Montreal Metropolitan Area is shared Velo-City Global 2012 amongst a provincial planning agency, the Metropolitan Vancouver will host the Velo-City Global 2012 conference from Transportation Agency (Agence métropolitaine de trans- June 26th to 28th. This is one of the world’s premier international port or AMT), three public transit corporations—the cycling planning conferences. It is a chance to exchange and showcase measures to encourage cycling-friendly cities where the bicycle STM, STL and RTL serving respectively the island of is part of both transportation and recreation. More information on Montreal, Laval and Longueil and the South Shore—and the conference is available at www.velo-city2012.com. 11 inter-municipal transportation councils serving the outer suburban area. The AMT manages the commuter rail network—which is operated by Canadian National accessibility and tourism potential; reducing travel Railway and Canadian Pacific Railway—as well as met- costs, air pollution, GHG emissions, and surface areas ropolitan terminals and some express services, while the dedicated to roads and car parking; using existing infra- Montreal Transit Corporation (Société de transport de structure more efficiently; and revitalizing urban centres. Montréal or STM) operates Montreal’s subway system, whose 68 stations serve Montreal, Laval and Longueil. All large municipalities in Canada have adopted pedestrian and cycling plans and strategies, some A number of public transit projects are currently of which incorporate other modes of self-propelled planned for the greater Montreal area. The Eastern transportation. Emphasis on active transportation con- Train (Train de l’Est) would see a new service offered nectivity has emerged, leading to cycling and public from Central Station in Montreal to Mascouche on the transit combination initiatives (e.g., “bike-and-ride” in North Shore of the Saint Lawrence. Construction for Toronto and “rack & roll” in Ottawa and Saskatoon). The this project began in 2010 and current project costs are promotion of active transportation has led to special estimated at $600 million. The AMT is studying a num- emphasis on on-road/off-road facilities for non-motor- ber of other projects, including a major track capacity ized movements within cities; for example, constructing increase on its Vaudreuil-Hudson Line, a project named new bike paths; road segregation that separates bicycle the Western Train (Train de l’Ouest), as well as subway and car lanes; improved cycling access and parking at extensions in Montreal, Laval and Longueil, in coopera- transit stations; and bicycle lockers and sheltered racks. tion with local transit authorities. The STM, meanwhile, purchased 468 new subway cars for $1.2 billion from Across the country numerous projects are underway Bombardier to replace 342 subway cars in use since to increase the urban bike path network. Vancouver has the subway began operating in 1966. These new cars more than 400 km of bike paths and cycling accounts should be introduced into the network beginning in for 4% of commuter trips, and in 2011 the city was 2014. The STM is also looking at ways to increase its net- the recipient of the Bill Curtis Technical Achievement work capacity, be it through reintroduction of tramways Award from the Canadian Institute of Transportation on a number of routes in the central core or by develop- Engineers—Vancouver Chapter. This award was in rec- ing priority measures for buses on 240 km of roadway. ognition of the Vancouver Downtown Separated Bike Lanes for outstanding transportation project achieve- Active transportation ment. Calgary also currently has more than 700 km of pedestrian and bicycle paths as part of its Pathway Narrowly defined, active transportation is any form of system, one of the largest in North America. The 2010 human-powered transportation, including walking, Pathway survey found that 95% of residents use the cycling, travelling on mobility devices, rollerblading, Pathway in one way or another, and in Toronto the skating, skateboarding, cross-country skiing and more. Bikeway Network will eventually include more than In a municipal context, active transportation plans and 1,000 km of bike paths, making every Torontonian no programs focus on specific trip purposes—such as more than a five-minute bike ride from the network. In trips to work, school or shopping—without neglecting Ottawa, the 2008 Cycling Plan proposed extending the recreational/tourist-related trips. Active transportation 540 km of bike paths the city enjoys to 2,500 km within requires safe, secure infrastructure (such as trails/paths, 20 years. In Quebec, the Green Road consists of more sidewalks and even the side of roads) that are con- than 4,000 km of bike paths across most of the province nected to activity centres in the community. and connects with the more than 650 km of bike paths in Montreal, while Halifax has a 98-km bicycle network, Active transportation goals pursued by Canadian including 87 km of bike lanes. municipalities include helping people and communities improve health, wellbeing and quality of life; increasing

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Accessibility in public transit Pooled vehicles The Canadian Transportation Agency’s mandate is—among other things—to ensure that the federal Bicycles transportation system is accessible to all Canadians Launched in May 2009, Bixi Montréal is Canada’s largest bike- and that undue obstacles are removed. This includes share system—an emerging active transportation initiative—with municipal transit systems that cross provincial or inter- 5,000 bicycles at 405 stations. The Bixi design has since been exported to other cities: Bixi Toronto opened in May 2011 and is national boundaries, such as OC Transpo in Ottawa/ the second largest bike share in the country with 1,000 bicycles and Gatineau. In a November 2007 decision, the Agency 80 stations, and Capital Bixi serves Ottawa/Gatineau with 100 bikes found that OC Transpo’s failure to call out stops was and 10 stations. an undue obstacle to persons requiring this due to a Preceded by other bicycle-sharing initiatives in Toronto and disability, and ordered OC Transpo to ensure that bus Edmonton, Bixi’s modular bicycle sharing system was developed operators call out major and requested stops on all of at the request of the Montreal parking authority. Numerous bike- its routes. sharing systems have been tested in Europe and in the United States as well, with bicycle theft and vandalism standing out as important OC Transpo has since installed the Next Stop issues in this type of system. Announcement System, which announces each upcom- Automobiles ing stop automatically in both official languages as the bus departs from the previous stop, while the Next Stop Car sharing is becoming a more popular form of urban transportation with car-sharing companies now in most of Canada’s large cities, Display inside the bus visually displays the route num- providing service to thousands of individuals, families and com- ber and destination, the upcoming stop and the time of panies. Communauto in Montreal is an example of socially and day in a bilingual format. environmentally oriented firms offering a car-equivalent approach to the Bixi system—it proposes car sharing as a way to reduce car ownership and therefore automobile emissions. Communauto sub- Urban congestion scribers have access to a fleet of 1,100 gasoline-powered cars and 50 electrical cars they can rent at a small cost for half an hour, an hour, a Cities are where most Canadians live and work, and day or a longer period of time. For its subscribers, Communauto has where substantial economic activities occur. Canadian developed partnerships with car-pooling initiatives, and has negoti- cities have experienced significant population and ated discounts with VIA Rail and transit authorities. Communauto economic growth over recent years—trends that will is present in Montreal, Laval, Longueuil, St-Lambert, St-Bruno, continue into the foreseeable future.29 However, the Sherbrooke, Québec City and Ottawa-Gatineau. increasing importance of cities has resulted in some complex challenges, such as urban congestion, which results from overuse of road space. and Vancouver—account for more than one-third of Canada’s GDP, demonstrating that urban freight move- Based on 2006 data, urban congestion in Canada’s ment is a significant contributor to the success of local, nine largest cities costs an estimated $3.1–$4.6 billion regional and national economies. When freight cannot annually. This is a conservative estimate, as it only takes travel efficiently to, from and within urban areas, eco- into account the costs related to time delays for drivers nomic, environmental and social impacts ensue. and to wasted fuel and GHG emissions.30 Congestion negatively affects the movement of people and freight Another way to decrease urban congestion is to in urban areas; moving freight efficiently through urban reduce automobile dependency and encourage a shift areas is vital for Canada’s competitiveness and prosper- to public transportation. While public transit is a provin- ity. For businesses, urban areas are not only important cial and municipal responsibility, the federal government markets for goods and services, but a significant por- has invested more than $6.5 billion in transit infrastruc- tion of goods can reach their intended destinations ture across Canada since 2002, through programs such only by travelling through major airports, marine ter- as the Building Canada Fund (BCF) and the Gas Tax minals and intermodal facilities located in urban areas. Fund. The federal government also helps mitigate the The three largest Canadian cities—Toronto, Montreal impacts of urban congestion by directly supporting

29 The percentage of citizens living in urban areas has continued to steadily increase. In the early years of the 19th century, 37% of Canada’s population lived in urban areas, while in 2006, 80% of Canada’s population lived in urbanized areas. Source: Statistics Canada (2006). Census Snapshot of Canada — Urbanization. (http://www.statcan.gc.ca/pub/11-008-x/2007004/10313-eng.htm) 30 Transport Canada (2009). Updates to Costs of Congestion Studies – Final Report.

106 Transportation2011 in Canada Road Transportation 9 activities that result in freight moving efficiently in urban areas. For example, the National Policy Framework for AUTO21 Strategic Gateways and Trade Corridors, released in AUTO21 is a Network of Centres of Excellence enhancing automotive 2007, was developed to advance the competitiveness of research and development (R&D) by partnering with the private sector the Canadian economy by facilitating international trade. to support more than 200 researchers covering 40 universities and The Framework emphasizes an integrated approach to 220 industry partners across Canada. R&D efforts aim to advance infrastructure that includes policy, regulatory and opera- automotive innovation in a variety of fields. Since 2001, AUTO21 tional measures. The $2.1-billion Gateways and Border has invested more than $90 million in R&D, which has resulted in Crossings Fund (GBCF) and the $1-billion Asia-Pacific more than 100 patents, licences and commercialization agreements. Gateway and Corridor Initiative (APGCI) provide federal funding for Gateway initiatives. Provinces and the private sector also contribute to these initiatives. • Border efficiency—Transport Canada is working with partner agencies in Canada and the U.S. to improve border efficiency by installing sensors to measure and Intelligent Transportation Systems broadcast wait times at the busiest border crossings.

Intelligent Transportation Systems (ITS) are a combi- Recent years have seen a shift towards a more holis- nation of innovative technologies, communications tic approach in many countries, often known as Smart systems and management strategies that are applied Corridor strategies. These ITS applications to transpor- to the transportation network to optimize operations. tation components of strategies allow a more complete In doing so, they maximize benefits from existing infra- capture of the strategies’ potential benefits. structure—increased efficiency, safety, security and Based on collaboration among stakeholders, Smart environmental sustainability—and minimize the need Corridor strategies use advanced technologies to sup- for new capital investments. ITS is also used to man- port integration across transport modes, improving age fleets of transportation equipment, while real-time overall corridor performance, reliability, safety and fuel data generated by integrated ITS provides valuable and use. Transport Canada is now implementing and devel- actionable operational information to system operators, oping Smart Corridor strategies in Canada’s gateways private sector transportation providers and travellers. and corridors. In the Asia-Pacific Gateway these efforts A wide range of ITS has been deployed in Canada, are quite advanced, and Transport Canada is leading and much more is planned. Illustrative examples of proj- efforts to integrate existing and planned systems. ects in which Transport Canada was a partner include: • Traveller information—in Metro Vancouver, a new 9.5 Road transportation Regional Traffic Data System will produce real-time traffic flow information along the region’s main roads and the environment and strategic highway corridors (including truck Road transportation can be seen in some respect to routes) and display it online, allowing drivers to avoid have a significantly higher environmental footprint than busy stretches and operators to manage congestion. others modes. This is in part due to the smaller size This will complement the area’s new Transportation of vehicles, which reduces fuel efficiency gains. Management Centre. However, this mode of transportation also presents a • Commercial vehicle operations—in British Columbia, number of opportunities to reduce its environmen- the Weigh2Go system improves commercial vehi- tal impact through alternative fuels, cleaner burning cle safety with intelligent inspection stations, which engines and technology. remotely measure vehicle weight and credentials at highway speed. • Supply-chain security/efficiency—the Canada-China Jurisdiction of environment Marine E-Tag Container Pilot Project will improve sup- and road transportation ply chain security and efficiency through the use of Air pollutant and GHG emissions from new vehicles produced radio frequency identification (RFID) tags as well as in or imported into Canada are regulated under the Canadian GPS/satellite tracking and monitoring technologies. Environmental Protection Act, 1999. Provincial and territorial governments are responsible for the performance of the in-use fleet.

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Road fuels Electric vehicles Advancing the development of lower carbon-inten- Together with industry, academia and various levels of govern- sive alternative and renewable fuels is supported ment, Transport Canada has been actively engaged in research and by the federal Renewable Fuel Strategy, which has development projects to overcome barriers to the widespread use four components: of electric vehicle technologies in Canada’s automotive sector. In fiscal year 2011–12, the department invested $1.05 million in tech- 1. increasing renewable fuel availability via regulation nologies to improve winter operations, increase safety and enhance efficiency in both the light- and heavy-duty sectors. Cross-modal 2. supporting the expansion of industry production applications have also been assessed to further reduce the energy and emissions footprint of the transportation sector as a whole. 3. assisting feedstock production in the agriculture sector 4. accelerating commercialization of new technologies Launched in 2010, the Natural Gas Use in the Canadian Transportation Sector Deployment Roadmap has brought The government released its Renewable Fuels together government and non-government organizations, Regulations in two parts: the first (in September 2010) industry and end-user stakeholders to discuss opportu- requires an average annual renewable fuel—fuel pro- nities and challenges for the broader use of natural gas in duced from renewable sources—content of 5% in the medium- to heavy-duty vehicle sector. gasoline starting December 15, 2010. The second, starting in July 2011, requires an average annual renewable fuel content of 2% in diesel fuel produced or imported Passenger Vehicle and Light for sale. Combined with complementary provincial regu- Truck Greenhouse Gas Emission lations, these federal regulations are expected to lower annual GHG emissions by up to 4 Mt—the equivalent of Regulations taking one million vehicles off the road. The Passenger Vehicle and Light Truck Greenhouse In 2007, the government also launched its ecoENERGY Gas Emission Regulations—which are aligned with U.S. for Biofuels Program, which will invest up to $1.5 billion regulations—apply to companies that manufacture or to boost domestic production of renewable fuels such import new passenger automobiles and light trucks as ethanol and biodiesel. Administered by Natural (2011 and subsequent model years) to sell in Canada. Resources Canada, this initiative runs until March 31, 2017 and, based on production levels and other fac- Companies must comply with unique fleet average tors, provides operating incentives to those producing GHG emissions standards for passenger automobiles renewable alternatives to gasoline and diesel. The ini- and light trucks for each model year; each company’s tiative will make investing in production facilities more unique fleet average standard is determined based on attractive by partially offsetting the risk associated with the size (i.e., footprint) and number of vehicles it sells of fluctuating feedstock and fuel prices. a given model year. Also in 2007, the Minister of Agriculture and Agri-Foods The fleet average GHG emissions standards become launched the $200-million ecoAGRICULTURE Biofuels progressively more stringent with each new model year Capital Initiative to provide repayable contributions from 2012–2016; the regulations also establish separate to help farmers overcome the challenge of raising the limits for other tailpipe GHG emissions such as nitrous oxide (N O) and methane (CH ). capital necessary for constructing or expanding bio- 2 4 fuel production facilities. The Biofuels Opportunities for The regulations also include provisions that recognize Producers Initiative was also expanded to assist pro- vehicle design improvements that reduce GHG emis- ducers to develop business proposals and feasibility sions through approaches other than directly reducing studies to expand biofuel production capacity. tailpipe CO2 emissions, including: Announced in the 2007 federal Budget and • technologies that reduce the impact of air conditioning administered by Sustainable Development Technology system refrigerant leakage (e.g., hydrofluorocarbons); Canada, the $500-million NextGen Biofuels Fund supports the establishment of commercial-scale demon- • technologies that improve the efficiency of air condi- stration facilities producing next-generation renewable tioning systems; and fuels and co-products. This fund is encouraging reten- • other innovative technologies that reduce GHG emis- tion and growth of domestic technology expertise and sions under conditions that are not captured by innovation capacity for cellulosic ethanol and biodiesel conventional emission testing procedures. production in Canada.

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Proposed regulations for • Ontario’s Electric Vehicles Plan, featuring consumer rebates and charging infrastructure investments, is greenhouse gas emissions from targeting to have one out of every 20 vehicles be elec- medium- and heavy-duty vehicles trically powered by 2020; • Québec’s “Blue Road” collaborative initiative with The proposed Regulations to Limit Greenhouse Gas Robert Transport and Gaz Métro, which features tax Emissions from New On-Road Heavy-Duty Vehicles and incentives and fuelling infrastructure for liquefied Engines would seek to reduce emissions and improve natural gas-powered commercial trucks operating the fuel efficiency of the whole range of new on-road between Québec City and Toronto, will serve as a cat- heavy-duty vehicles—from full-size pick-up trucks to alyst for future private sector investments in this area; tractor-trailers—and include a wide variety of voca- tional vehicles such as freight, delivery, service, cement, • Quebec’s 2011–2020 Action Plan for Electric Vehicles, garbage and dump trucks and buses. The regulations featuring consumer rebates, charging infrastructure would also promote implementing advanced technol- investments, education, outreach, and public transit ogy vehicles such as hybrid and electric vehicles. and industry development incentives, aims to have up to 25% of all new light passenger vehicles sales to be The proposed regulations would continue to build electric vehicles by 2020; upon the policy of alignment of vehicle emission regulations with the Unites States given the integrated nature • New Brunswick’s Climate Change Action Plan, which of the North American vehicle manufacturing industry. includes the adoption of weigh-in-motion facilities and strategic highway infrastructure investments to These regulations would apply to those manufactur- improve the flow of goods and people as well as per- ing and importing new on-road heavy-duty vehicles and mitting more efficient long combination vehicles to engines to sell in Canada, but not to owners or opera- operate on four-lane highways in the province. tors of heavy-duty vehicles or engines. They would also establish GHG emissions standards that would be expressed as the quantity of GHG emissions emitted Environmental emissions per unit of work delivered. from trucking

Provincial initiatives on sustainable Progress has been made in reducing the environmental impacts of trucks. Federal government regulations transportation on air emissions from diesel engines were tightened in 2007 and again in 2010, and as a result, particulate Nearly every province and territory has a climate change matter, carbon monoxide and other combustion prod- and air quality action plan that includes measures to ucts are decreasing as new trucks displace older ones. reduce current and future GHG and air pollutant emis- Carriers are making technological improvements to sions from transportation. Some of these action plans reduce fuel consumption, such as installing devices that include legally binding emissions reduction targets improve truck aerodynamics and using low-rolling resis- (established via provincial legislation or regulation). tance tires. GHG emissions are now decreasing for new Each action plan, and associated transportation and existing trucks equipped with these devices. measures, is tailored to the specific needs and chal- Changes to provincial/territorial regulations for vehicle lenges of the respective jurisdiction. Transportation weights and dimensions are facilitating carriers’ adop- measures include fiscal and tax incentives to facilitate the tion of more efficient equipment. Long Combination adoption of clean transportation technologies or practices, Vehicles (LCVs) were identified by the Canadian Council direct financial investments, as well as education and out- of Energy Ministers in Moving Forward on Energy reach programs. Select provincial measures include: Efficiency in Canada as one of four priority areas due • British Columbia’s revenue-neutral carbon tax on to their potential to move light, bulky, freight-like food GHG emissions from fossil fuel combustion, which products, some automotive parts, and consumer goods will increase fuel prices similar to motor fuel taxes more efficiently, and to therefore save on fuel consump- and create incentives for fuel efficiency and lowering tion and reduce GHG emissions. vehicles kilometres travelled;

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Between 2006 and 2010, fatalities decreased by 24.2% for all categories of road users. The biggest Jurisdiction of road safety in Canada drops have been with bicyclists, drivers, and pas- Responsibility for road safety is divided between the federal and sengers—down 31.5, 27.3 and 22.9%, respectively. provincial/territorial governments, who in turn delegate some respon- Motorcyclist fatalities were also down 17.0% during this sibilities to municipalities, such as speed limits on local roads. period, while pedestrian fatalities dropped 17.8%. Transport Canada sets and enforces safety standards required for new Of the estimated 2,186 fatalities in 2010, speeding vehicles sold in Canada, including imported vehicles (new and used), and regulates federal jurisdiction motor carriers (e.g. hours of service was cited as a contributing factor in about 25.0%, down regulations for commercial vehicle drivers of trucks and buses). from 27.4% in 2006. In an attempt to reduce the number of speed-related collisions, several jurisdictions have The provincial/territorial governments’ Highway Traffic Acts or Motor Vehicle Acts regulate drivers and vehicle use, including driver licenses, introduced serious penalties (including heavy fines and vehicle loading, winter tire use, seat belt usage and speed limits. vehicle impoundment for street racing or travelling 50 km/hr or more above the posted speed limit). In the wake of economic deregulation of the trucking industry in 1988, the National Safety Code (NSC) was developed with the provinces and territories to advance commercial motor carrier safety. oad afety trategy NSC standards are adapted, administered and enforced by the prov- R S S inces and territories, and address key safety aspects of commercial Canada’s third national road safety plan, Road Safety vehicle operations such as hours of service, cargo securement and issuance of safety fitness certificates. Federal, provincial and territo- Strategy 2015 (RSS 2015), became effective January 1, rial regulations provide uniform and equitable treatment of motor 2011. The result of extensive consultations among gov- carriers across Canada. ernment members and key road safety stakeholders, the The Canadian Council of Motor Transport Administrators is a non- new five-year strategy was endorsed by the Council of profit organization comprised of provincial, territorial and federal Ministers Responsible for Transportation and Highway government representatives that seeks consensus on administration Safety in September 2010. and operational matters dealing with licensing, registration and control of motor vehicle transportation and highway safety. RSS 2015 retained key branding elements of RSV 2010, namely the vision of achieving the safest roads in the world as well as the four strategic objectives of raising public awareness and commitment to road safety, improving communication, cooperation and collaboration among all stakeholders, enhancing enforcement, 9.6 Safety and improving road safety information in support of research and evaluation. Overview However, RSS 2015 also differs from RSV 2010 and 2010’s estimated road casualty collisions decreased has adopted a more ‘holistic’ or ‘safer systems’ approach 0.6% from 2009, with fatalities dropping 1.0% and inju- to reducing fatalities and serious injuries. Strategies and ries decreasing 0.5% (see Table S7). Between 2006 and interventions guiding improvements for road users, road 2010, road casualty collisions decreased by 15.4%, from infrastructure and vehicles will be housed in a matrix of 145,115 to 122,820. During the same period, fatalities best practices that jurisdictions can adopt to address decreased from 2,884 to 2,186 (a decrease of 24.2%) key road safety challenges or risk groups. These strate- and injuries dropped 15.4%, from 202,854 to 171,694. gies would also help to decrease deaths and serious The average number of fatalities from 2006 to 2010 was injuries due to traffic collisions in Canada. 2,634—6.5% lower than the average number (2,817) in The framework of best practices will be updated reg- the previous five-year period (2001–2005). Overall, dur- ularly as new, successful strategies are adapted from ing the 10-year period, fatalities have dropped 20.7%, other countries or as existing strategies are evaluated from 2,756 in the year 2001 to 2,186 in 2010. This and their effectiveness established. Hard targets will not occurred while the numbers of registered vehicles and be adopted at the national level, but may be adopted drivers were steadily increasing. by provinces/territories if they wish. National progress Fatality rates per 10,000 registered motor vehicles will be measured using rate-based measures, such as dropped from 1.4 in 2006 to 1.0 in 2010. Following a deaths per number of registered vehicles or per number similar trend, fatalities per billion vehicle-kilometres trav- of people. elled dropped from 8.8 to 6.6, while fatalities per 100,000 This flexibility is one of the key attributes of RSS licensed drivers dropped from 13.0 to 9.5. Fatalities per 2015. The new strategy allows all jurisdictions to tailor 100,000 people also dropped from 8.9 to 6.6. and implement road safety strategies that are deemed

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feasible and that target their most critical road safety One proven initiative authorized under the Criminal challenges. Jurisdictions will be primarily account- Code of Canada is the use of aftermarket breath alcohol able within their respective operating environments. It ignition interlocks for convicted impaired drivers, which is anticipated that customized strategies will be intro- require drivers to provide a breath sample before being duced to support unique road safety requirements and able to start their vehicles. If the convicted driver’s alco- will collectively contribute to national reductions in fatal- hol level is above a preset limit, the vehicle will not start. ities and serious injuries. These safety devices, purchased and installed at the vehicle owner’s expense, allow convicted impaired drivers to use their vehicles, while ensuring, while ensuring oad afety egulations R S R they do not drive while impaired. Interlocks allow con- Canada continues working to align its motor vehicle victed individuals mobility while reducing the risk they regulations as much as possible with those of the may otherwise pose to the general road-using public. U.S. while also considering specific Canadian condi- Research has shown that these devices reduce the tions. Thirty-three amendments were published from incidence of alcohol-impaired driving. All provinces now 2007–2011, with two more planned for 2012, many of have alcohol interlock programs where drivers must first which align Canadian requirements more closely with serve a driving suspension and qualify under provincial those of the United States. In 2011, harmonization rules. A voluntary national standard has been created activities received added impetus and profile due to the for ignition interlock technology, and more jurisdic- Regulatory Cooperation Council announced by Prime tions are introducing programs to increase its use; for Minster Harper and President Obama in February 2011. example, before issuing a criminal conviction or for low In support of global harmonization of motor vehicle (i.e., below criminal code level) BAC drivers. Preliminary safety regulations, Canadian regulations also include research suggests that these programs can significantly the option to follow several United Nations regulations reduce impaired driving by previously convicted drivers. for alternative testing requirements. Transport Canada supports and participates in the development of har- Seat belt usage monized vehicle regulations though the United Nations Economic Commission for Europe’s World Forum for Seat belts save thousands of lives every year. An RSV Harmonization of Vehicle Regulations, which includes 2010 sub-target was for at least 95% of Canadians to the development of Global Technical Regulations wear seat belts consistently. In 2009, 33.6% of fatally (GTRs). To date, Transport Canada has aligned with injured drivers and 36.3% of fatally injured passengers GTRs addressing door locks and door retention compo- were not wearing seat belts (see Addendum Table S8). nents, motorcycle brake systems and electronic stability In comparison, 14.5% of seriously injured drivers and control systems. 23.3% of seriously injured passengers were not wearing seat belts.31 Impaired driving Transport Canada conducted an observational survey of daytime seat belt use in rural communities across Of fatally injured drivers tested for alcohol in 2009, Canada in September 2009, followed by a similar survey 37.6% had a positive blood alcohol concentration in urban communities in September 2010. The surveys (BAC). While this is lower than the 38.7% in 2008, it showed that seat belt use was lower in rural areas was slightly higher than 2005’s 36.5%. Of fatally injured (92%) than urban communities (95.8%). The rate was drivers with a positive BAC in 2009, 14.1% had alco- lower among occupants of light trucks (about 92%) than hol levels between 1 and 80 mg%; 26.1% had levels occupants of passenger cars (about 95%); it was also between 80 and 160 mg%; and 59.8% had alcohol lev- lower among male drivers (94.3%) than female drivers els greater than 160 mg%—more than twice the legal (96%). Only 93% of drivers aged 24 and under wore a limit. Of all fatally injured drivers who were tested, 22.5% seat belt, compared with 94.8% of drivers 25–49 and had a BAC that was more than twice the legal limit (160 96% of those 50 and over.32 mg%), 9.8% were between 80 and 160 mg%, and 5.3% were between 1 and 80 mg%. The balance (62.4%) did not test positive for alcohol (see Table S9).

31 More details are available at http://www.tc.gc.ca/eng/roadsafety/tp-tp3322-2009-1173.htm 32 More information on these surveys, vehicle restraints and safety studies and programs are available at http://www.tc.gc.ca/roadsafety/stats/menu.htm

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Child seats music, navigate, and access the Internet, as well as use a growing number of other applications. Consequently, Regulated child safety seat requirements have been distracted driving is an emerging road safety issue. updated to reflect the changing size and weight of chil- All 12 jurisdictions except Nunavut now have spe- dren in Canada. The major changes include: cific distracted driving legislation restricting the use • a new testing requirement using a three-point seat of hand-held devices and other common distracters. belt to secure car seats in vehicles; Observational surveys are also being undertaken at the jurisdictional level to monitor the use of these technolo- • adopting most U.S. testing parameters for dynamic gies while driving. testing of child seats; Transport Canada has an ongoing driver distrac- • changing the definition of an infant from 9 kg to 10 kg tion research program to better understand the safety (seat is designed to be rear-facing only); implications of new technologies and to identify distrac- • increasing the maximum allowable weight limit of tion countermeasures. The department is also working child seats from 22 kg to 30 kg; with the provinces and territories and other road safety stakeholders nationally and internationally to develop • introducing dynamic testing requirements for booster standards to reduce driver distraction. seats; and • allowing harnesses to be certified for use on school Motor Vehicle Test Centre buses by special needs children. Transport Canada’s Motor Vehicle Test Centre (MVTC), located in Blainville, Quebec, has been modernized and Defects and recalls expanded to allow motor coaches and school buses to be crash-tested, and moving-car-to-moving-car and Motor vehicle and vehicle-related equipment recalls rollover collisions to be carried out. Completed in March have increased over the past few decades. The industry 2011, the modernized MVTC is the only vehicle test and economy have evolved significantly over this time facility of its kind in North America and the only compre- span, and while not appropriate to attribute this increase hensive vehicle safety test facility in Canada. to a single reason, the following are contributing factors: The project was funded through the Government of • more makes of vehicles are being imported and sold; Canada’s 2009 Economic Action Plan and represents the • more models of vehicles are being sold; largest single investment in the MVTC since its construction more than 30 years ago. The modernization includes: • increased technological complexity of vehicles; • a new 200-metre acceleration test track coupled with • greater international commerce in vehicles with new a 100-metre parallel track for high-speed and moving- entrants; and car-to-moving-car frontal/rear crash testing at varying • greater public awareness and web-based commu- offsets; nications have made it easier and more convenient • a new 100-metre test track installed at a 90-degree for the public to contact manufacturers and Transport angle to the main track to carry out moving-car-to- Canada to report potential defects. moving-car perpendicular side impact crash tests and rollovers; Driver distraction • a 100-metre adjustable track for moving-car-to-mov- Driving is a complex task that requires a high level of ing-car oblique side impact crash tests; and attention from the driver. In-vehicle information, enter- • a new pedestrian laboratory to evaluate methods of tainment and telecommunication devices are becoming protecting pedestrians from motorized vehicles. increasingly popular with drivers, and vehicles are now often equipped with ports or wireless connections for The new facility is anticipated to play a major role in portable devices. This connectivity allows drivers to advancing motor vehicle safety and promoting the devel- make phones calls, send email and text messages, play opment of expertise in occupant and pedestrian safety.

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Road construction The Transportation Association Roundabouts have been recognized as an effective of Canada (TAC) safety measure on roads around the world. Although TAC is a national association with a mission to promote the provision fairly new in Canada, roundabouts are already proving of safe, secure, efficient, effective and environmentally and finan- their many benefits, such as eliminating left-hand turns cially sustainable transportation services in support of Canada’s in front of oncoming traffic, decreasing collisions, slow- social and economic goals. TAC is primarily focused on roadways ing vehicles within the intersection, improving traffic and their strategic linkages and inter-relationships with other com- flow, and reducing vehicle emissions and fuel consump- ponents of the transportation system. TAC has recently developed a tion. Canada—through the Transportation Association number of guides and best practices that practitioners across Canada can use to improve Canadian road safety. These include guidelines of Canada—has developed national rules of the road for using chevron alignment signs; recommended practices for as well as uniform signs and pavement markings for LED-embedded traffic signs, guidelines for selecting traffic sign single and multi-lane roundabouts. The department has sheeting that meets minimum retro-reflectivity levels; guidelines for also developed two educational brochures to inform the the network screening of collision-prone locations; a winter road public on how roundabouts are to be used by motor condition terminology guide to report driving conditions consis- vehicle drivers, pedestrians and bicyclists. tently; a synthesis of practices for median design; and uniform signs and pavement markings for multi-lane roundabouts.

Outreach The United Nations—with Canada as a sponsoring Transport Canada, arrive alive DRIVE SOBER®, the nation—has declared 2011–2020 the Decade of Action Ontario Students Against Impaired Driving, and Student for Road Safety (the Decade). Its objective is to stabilize Life Education Company Inc. partnered to update the and then reduce the forecasted level of road traffic fatal- award-winning iDRIVE Road Stories DVD. Produced ities around the world, which are predicted to become in 2009, the original 23-minute video was created the fifth leading cause of death (1.9 million by 2020 to educate youth about safe and sober driving. In compared to 1.3 million today). For the Decade—which February-March 2011, the iDRIVE video was updated was launched May 11, 2011—member states, interna- as a national version. The updated version features the tional agencies, civil society organizations, businesses latest information about new measures (provincial and and community leaders have been called upon to cre- federal) to address these issues, and was distributed to ate action plans to help achieve the objective. A Global 3,400 high schools across Canada, with the exception Plan has been created to help member nations develop of Ontario and Quebec. Ontario schools were offered individual action plans. The Global Plan has five pillars: the updated version or were welcome to use the exist- road safety management; safer roads and mobility; safer ing version; Quebec schools had their own version of a vehicles; safer road users; and post-crash response. similar video. More than 40 road safety partners, including driving schools, and the P.A.R.T.Y. (Prevent Alcohol Transport Canada will champion the Decade and in and Risk Related Trauma in Youth) Program have incor- consultation with other federal departments, provincial porated the iDRIVE video into their programs. and territorial governments and non-governmental road safety organizations, will compile the related Canadian In partnership with the Canadian Automobile initiatives as a national plan. It has also developed a plan Association (CAA) and Canadian Tire, Transport Canada for its own initiatives to support the Decade of Action for launched the Winter Driving Campaign in November Road Safety. 2011 to encourage Canadians to get their vehicles ready for winter and practice safe winter driving techniques. Another outreach program developed by Transport 9.7 Security Canada and the Canadian Council of Motor Transport The Government of Canada has taken a collaborative Administrators is the Leave the Phone Alone Campaign. approach with road operators, including urban transit Through web-based tools, it encourages drivers to and intercity bussing to improve their security cultures. pledge to not use hand-held devices while driving. More Transport Canada has been working with urban transit and than 1,100 people to date have pledged to leave the intercity bus industry partners and their respective asso- phone alone while driving. The campaign has also been ciations (e.g., Canadian Urban Transit Association (CUTA) incorporated into a variety of educational programs and Motor Coach Canada (MCC)) through the Steering across Canada, including driving schools, P.A.R.T.Y. Committee for Rail and Urban Transit Security Standards Program and by the City of Ottawa.

2011Transportation in Canada 113 9 Road Transportation

Development to develop Codes of Practice (COPs) In February 2011, Canada and the U.S. issued a and other guidance materials on key security activities. declaration entitled “Beyond the Border: A Shared Vision Recently developed security COPs include: Conducting for Perimeter Security and Economic Competitiveness”. Security Risk Assessments; Developing and Maintaining Key areas of cooperation include: addressing threats Security Plans; Conducting Security Exercises; Employee early; trade facilitation, economic growth and jobs; Training and Awareness; and a draft COP on Developing integrated cross-border law enforcement; and critical Public Security Awareness Campaigns. infrastructure and cyber-security. A joint action plan was released on December 7, 2011, setting out 32 initia- Transport Canada has also established an Intelligence tives aimed at achieving the vision. It could also change Network for the sharing of security intelligence and inci- the way security impacts operators. For instance, an dent reporting among railway, urban transit and intercity integrated cargo security strategy will be developed, bus operators. It has also been conducting a risk-based including common standards for screening inbound analysis to determine the best approach for enhancing air and marine cargo at the first point of arrival in North security for the transportation of dangerous goods by America. Under the principle “cleared once, accepted road, using a multi-phased policy development process twice,” this same cargo, transported by rail or truck, that includes an environmental scan, consultations and would then be given accelerated passage across the information gathering, a strategic security risk assess- land border. The strategy will also work toward stream- ment and an evaluation of potential policy options. The lining and simplifying border and security processes to process includes consultations with industry, other place less of a burden on industry. federal government departments and provincial representatives. Transport Canada will continue its efforts to conduct this risk-based analysis by further engaging and consulting industry stakeholders and other federal government departments and provincial representatives. The effects of 9/11 and the changes to customs processes that followed have continued to shape the Canada-U.S. border. Despite efforts to improve movement across the border, the perception remains that challenges continue to hamper trade and travel. Several approaches were taken over the years in response.

114 Transportation2011 in Canada Transportation of Dangerous Goods 10

Economic growth. New pressures on Canada’s transportation system. Amended Acts and regulations. 2007–2011 was a period of change for the transportation of dangerous goods.

10.1 Overview of market adds pressure to transportation networks. Growth such as this must occur with proper attention Transportation of paid to both the transportation of dangerous goods Dangerous Goods and to Canada’s emergency response capabilities. With traffic volume increasing across all modes of transporta- Dangerous goods means a product, substance or tion, delays may occur, which means these dangerous organism that, because of its quantity, concentration, goods, much like other types of goods may spend more or physical or chemical characteristics may pose a real time in the transportation system. This is taking place hazard to human health or the environment—such as while Canada’s transportation system is simultaneously gasoline, heating oil, paints, medication, household becoming more integrated, leading to increased expec- cleaning products and other materials used in homes tations for the seamless movement of dangerous goods and industrial activities. between modes (e.g. from ship to train to motor carrier) and across borders. Transport Canada estimates that, in terms of tonnage, 70% of dangerous goods are transported by road, Handling and transporting dangerous goods also 24% by rail and 6% by marine. A very small quantity raises concerns related to security and the environ- of dangerous goods, accounting for less than 1%, is ment. Issues such as real and perceived security transported by air. The most common dangerous goods threats have compelled Transport Canada to amend the commodities transported in Canada are crude petro- Transportation of Dangerous Goods Act, 1992 in 2009 to leum oil, gasoline and fuel oils, representing 77% of all permit emergency response measures addressing dan- dangerous goods transported by road. Alberta, because gerous goods that have been lost, stolen or unlawfully of its oil industry, is the province with the highest volume interfered with and that may be used in security-related of dangerous goods movement on the road. incidents. The pressure to mitigate environmental impacts related to the release of dangerous goods has In 2009, Industry Canada indicated that about $40 significant implications for the design and structure billion of chemical products are shipped in Canada of containment methods and in procedures related to annually, representing more than 8% of all manufactur- emergency response (see tables S22 to S24). ing shipments in the country. Highly trained personnel are required to manage these dangerous goods and their associated risks. 10.2 2011 Year in Review Transport Canada is the major source of regulatory • In 2011, 358 accidents were reported to Transport development, information and guidance on the trans- Canada, meeting the transportation of dangerous portation of dangerous goods (TDG) in Canada, and goods Regulations’ Part 8 reporting requirements—an works closely with other federal, provincial and territorial 18% increase from 2010, but 5% below the five-year agencies to foster effective and responsive governance (2006–2010) average. and promote safety and efficiency. • Transport Canada, its stakeholders and emergency Global economic growth and new sources of demands response personnel were involved in Exercise Kaboom place pressure on Canada’s transportation system. in March. The purpose of the exercise was to draw upon For example, the dramatic growth of the Asia–Pacific

2011Transportation in Canada 115 10 Transportation of Dangerous Goods

existing capabilities for Class 7, Radioactive Materials As the transportation of dangerous goods is a matter under the Emergency Response Assistance Program of concern for all Canadians, Transport Canada regularly and to run an exercise testing these capabilities in the consults with industry and with provincial and territo- context of a Chemical Biological Radiological Nuclear rial governments about relevant policy changes through and Explosive Response Program (CBRNE) incident the Transportation of Dangerous Goods General Policy requiring response to a radioactive dispersal device. Advisory Council and biannual Task Force meetings. Exercise Kaboom demonstrated industry participants’ response capabilities harnessed in a full-scale, live-play, multi-agency CBRNE exercise. The exercise validated 10.4 TDG Issues industry response capabilities by demonstrating the ability of response resources to effectively address gaps egulatory framework in incident response. All exercise participants and stake- R holders worked well together forming linkages. Transport Canada is aligning the Transportation of • The transportation industry implemented operational Dangerous Goods Regulations (TDG Regulations) with changes in response to new requirements result- the amended Transportation of Dangerous Goods Act, ing from the amended Transportation of Dangerous and is creating a compliance and response capabili- Goods Act. ties training program that will also fall in line with the amended requirements. • Several regulatory amendments were completed, including clarified requirements for Emergency Specific focus will be placed on harmonizing the TDG Response Assistance Plans (ERAPs) and established Regulations with recent international regulations—incor- compensation for plan holders (authorized by the porating updated references to technical standards— Minister of Transport) when they respond to actual or for the selection, use and manufacturing of means of anticipated releases of dangerous goods. containment, as proper classification of dangerous goods and selection of adequate containment means are key to the safe transportation of dangerous goods. Transport 10.3 2007–11 Recap Canada is also enhancing its ability to gather data to support risk-based analysis and decision making, and has In response to industry changes and new security issues, initiated work to amend data-reporting requirements. Parliament amended the Transportation of Dangerous Goods Act in 2009 to provide requirements and Partnering with the U.S. Department of Transportation authorities regarding: security regulations; emergency Pipeline & Hazardous Materials Safety Administration, response plans; and control of the design, manufac- Transport Canada is working to establish a cooperative turing, repair and testing of containers used in the arrangement that will increase regulatory harmonization and transport of dangerous goods. These authorities allow reciprocity to reduce costs for approvals, product testing, Transport Canada to develop new policies and regula- export certification and authorities’ approvals requirements. tions—using the established consultation process—to enhance safety and security for Canadians while trans- Emergency response/CANUTEC porting dangerous goods. The Canadian Transport Emergency Centre (CANUTEC) While remaining focused on preventing incidents is a national advisory service that helps emergency when dangerous goods are imported, handled, offered response personnel handle dangerous goods emergen- for transport and transported, the revised Transportation cies 24 hours a day, seven days a week. CANUTEC is of Dangerous Goods Act expands the Government of staffed with bilingual scientists trained in emergency Canada’s response capability in the event of a security response and specialized in chemistry or a related incident involving dangerous goods. This includes the field. Emergency response advisors are experienced in CBRNE, which allows for a Canada-wide response to interpreting technical information from various scien- terrorism incidents involving such materials. tific sources to provide pertinent and timely emergency The ongoing harmonization of regulations and response advice to the First Responder community. standards between Canada and the U.S. that incorpo- For the shipment of specific dangerous goods, rate United Nations recommendations has facilitated Emergency Response Assistance Plans (ERAP) must trans-border shipments, while increased awareness be approved by Transport Canada. Emergency situa- efforts have given industry direct access to Transport tions involving these materials may require Remedial Canada inspectors through a Web feedback portal. Measures Specialists (RMSs) at the scene; in these

116 Transportation2011 in Canada Transportation of Dangerous Goods 10

cases, joint CANUTEC/RMS experts provide Transport Ranking sites according to a measured risk helps Canada’s dangerous goods technical assistance expert ensure that dangerous goods are handled and trans- advice to first responders. These individuals are experts ported safely in any mode of transport in Canada. in dealing with an emergency and in the characteristics of the dangerous goods involved and their possible afety performance impact on people and property. Transport Canada dan- S gerous goods inspectors may also respond either in To better evaluate risk, accidents occurring during the person or by teleconference, and can veto the proposed transportation or handling of dangerous goods must response and suggest alternatives if they believe public be tracked. The TDG Regulations outline reporting safety is at risk. requirements for releases of dangerous goods above In addition to providing expert advice, CANUTEC pre-determined quantities and use data from these also offers a free 24-hour emergency telephone service reports to calculate risk. for Canadian consignors wishing to use this telephone More than 70% of the 358 dangerous goods acci- number on their dangerous goods shipping documents. dents reported to Transport Canada in 2011 occurred Approximately 7,000 consignors are registered for this during handling at transportation facilities and the service. In 2011, CANUTEC dealt with 1,032 emergency remaining 30% during transit (please see Addendum situations and handled more than 26,000 telephone Tables S22 to S24). Ninety-six road-mode accidents calls in 2011. were reported, representing more than 92% of in-transit CANUTEC is responsible for the production of the dangerous goods accidents. The remainder occurred in Emergency Response Guidebook (ERG), a joint effort the rail (6%) and air modes (2%). The TDG Regulations between Canada, the U.S., Mexico and Argentina that do not cover in-transit marine accidents involving bulk is distributed to the Canadian First Responder com- shipments of dangerous goods. munity (and is also available in electronic format via Seven injuries and no deaths were attributed to the Transport Canada website, free of charge). A new dangerous goods in 2011. From 2006 to 2010, there guidebook is published every four years to reflect any were an average of 11 injuries per year. The major- changes in emergency response procedures and to ity of dangerous goods accidents involved Class 3, update material names and identification numbers Flammable Liquids (61%); Class 8, Corrosives (19%); (called United Nations numbers). A newly revised edition or Class 2, Gases (12%). Most of the dangerous goods of the guide will be released at the beginning of 2012. accidents in 2011 occurred in Alberta (63%), Ontario (12%) or Saskatchewan (8%). Risk-based approach The top two categories of underlying factors contributing Handling and transporting dangerous goods presents to accidents were human error (56%) and equipment a high risk to those directly involved as well as to the (32%), which includes gauges, valves, vents, closures, public at large. Risk is defined as the probability of hoses and more. damage, injury, liability, loss or other negative occurrence; examples of such negative occurrences include Auditor General Report economic losses, infrastructure damage and death. On December 13th, 2011, the Commissioner of the More than 40,000 Canadian sites are subject to the Environment and Sustainable Development tabled TDG Regulations. As a result, Transport Canada must its December report. Chapter 1 examined Transport allocate inspection resources where they will have the Canada’s oversight of the transportation of dangerous greatest impact. The risk-based approach currently goods. The Audit focused on the oversight function of being implemented involves inspecting sites accord- the program and recommended that Transport Canada ing to the risk they pose to public safety. Using this establishes and implements an action plan to approach, sites subject to the TDG Regulations are ensure that: ranked according to factors such as the last time they were visited, their compliance history, the nature and • Compliance monitoring and follow-up procedures quantities of dangerous goods handled and other char- are documented; acteristics. A score is then assigned to every site based • Roles and responsibilities for dangerous goods on the risk it represents, and those with the highest inspections within Transport Canada are clarified; scores are given priority by inspectors.

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• A performance measurement system that allows the tank) that hold the couplers and draft gears. They are a department to report on the rate of regulatory compli- structural part of a car under-frame and transmit coupler ance is implemented; forces to the car body. • The policy and procedure requirements for the review and approval of the emergency response assistance TDG Research plans are clarified; Transport Canada’s transportation of dangerous goods • Necessary guidance to review emergency response Research and Development (R&D) program plans, assistance plans is developed, and; manages and delivers engineering and scientific R&D projects, with the objective of informing and contribut- • A plan and timeline to complete an emergency response ing to public safety in the transportation of dangerous assistance plan is developed and implemented. goods. Transport Canada has put in place a management Transport Canada was involved in the following action plan that addresses all the findings in the report. research projects in 2011:

Transportation Safety Board and • Investigation of Multiple Tank Car Rollover Derailments Related to Double Shelf Couplers and its Solutions— dangerous goods Transport Canada is working with the National Research Council of Canada’s Centre for Surface Transport Canada works with the Transportation Safety Transportation Technology to better understand tank Board (TSB) to investigate accidents. Collaboration car domino rollover derailments and assess solutions occurs during on-site investigations (for Transport that could reduce these types of derailments. Tank Canada’s own assessment of the situation with respect car domino rollover derailments occur when the initial to TSB’s authority), during reviews of TSB reports, and derailing tank cars are able to progressively roll over in relation to Transport Canada’s response to TSB rec- a number of subsequent tank cars. For further infor- ommendations for preventing similar accidents. mation, refer to the article in the Transport Dangerous 1 Active TSB recommendations pertaining to transpor- Goods Newsletter, Fall 2011 edition . tation of dangerous goods accidents in 2011 include • Assessing the Toxicity of the Transport of Petroleum a recommendation related to tanker rail cars (tank car) Sour Crude Oil—This ongoing project will provide standards for 286,000-pound cars that have been Transport Canada with important data and information applied to new non-pressurized transportation of dan- regarding proper classification, safety marking and gerous goods tank cars, and another recommendation how petroleum crude oil should be contained during tied to protocol for reporting and analyzing tank car stub transport. The objective of the project is to correlate sill failures so that unsafe cars are repaired or removed the hydrogen sulphide concentration in petroleum from service. Tank car stub sills are the two short steel sour crude oil to the toxic vapours it generates during beams (one attached to the bottom of each end of a transportation in highway tanks.

1 See http://www.tc.gc.ca/eng/tdg/newsletter-fall-2011-1120.htm

118 Transportation2011 in Canada Gateways and Corridors 11

Canada’s Gateways and Trade Corridors comprise the transportation infrastructure, systems, operations, technology, regulatory and policies related to the marine, road, rail, and air modes supporting freight and passenger flows of national significance for international commerce. As a trading nation, Canada aims to improve the country’s competitiveness in the world market leveraging the Strategic Gateways and Trade Corridors approach.

11.1 The Emergence of On the east coast, while European trade dominates, imports from South America and South Asia have grown Strategic Gateways significantly since 2000, providing new trade opportuni- and Trade Corridors ties for Canada. With global supply chains evolving, trade movement on In response to the increase in trade and the resulting the rise and new markets emerging, the Government impact on the transportation system, the Government of Canada is working to ensure Canada’s ongoing of Canada released the National Policy Framework for trade competitiveness through the implementation of Strategic Gateways and Trade Corridors in July 2007. long-term policies, strategic planning, and focused This Framework was developed to improve the capacity investment in the transportation system. and efficiency of the country’s transportation system to support international trade, thereby advancing the com- Since 1995, world container trade has more than petitiveness of the Canadian economy. The Framework tripled, exceeding 500 million twenty-foot equivalent provides focus and direction through a government- units (TEUs) in 2009. In the same period, Canada’s trade wide approach that fosters further development and with the rest of the world grew by 65%. Canada’s major optimization of the transportation system that is funda- ports now handle almost 33% more international trade mental to Canada’s success in international trade. volumes and 65% more containers than a decade ago. This trade increase has also affected Canada’s airports, The National Policy Framework emphasizes Canada’s railways, roadways and internal waterways. geographic advantages, includes long-term planning and public-private collaboration, and applies an The growth of containerization has had a significant integrated approach to assessing and implementing impact on world trade and created the opportunity for infrastructure, policy and operational measures. Canada to become a key gateway for Asia–North America trade. In the decade leading up to 2005, Under the National Policy Framework, Canada’s Canada’s trade with China alone grew by almost 500%. Gateways are divided into three strategic regions: All levels of government, along with private stakeholders, the Asia–Pacific Gateway and Corridor, the Ontario– responded to improve both the capacity and efficiency of Quebec Continental Gateway, and the Atlantic Gateway the transportation infrastructure on Canada’s west and Trade Corridor. As each gateway is unique, specific coast. In 2006, these efforts culminated with the launch strategies aim to reflect each region’s local realities, of the Asia–Pacific Gateway and Corridor Initiative opportunities and challenges, while recognizing that (APGCI). The systems-based, multi-modal APGCI strat- these gateways are complementary to one another. egy extends beyond infrastructure to include policy, regulatory and operational measures to improve the effi- Current gateways and ciency and reliability of the supply chain. trade corridors Canada’s connectivity with the U.S.—the country’s largest trading partner—is also crucial. Central Canada’s The objective of the Asia–Pacific Gateway and Corridor transportation infrastructure handles approximately (APGCI) Initiative is to strengthen Canada’s competi- 70% of trade (by value) with the U.S. tive position by establishing the best transportation

2011Transportation in Canada 119 11 Gateways and Corridors network between Asia and North America. To date, 47 with the private sector—owners, operators and users strategic transportation infrastructure projects valued of the transportation system in Canada. Stakeholder at more than $3.5 billion have been announced by the roundtables, workshops and direct consultations federal government in partnership with all four western create a strong base for collaboration to identify the real provinces and other public and private sector partners. issues that impact the efficient movement of freight and This gateway links the ports of Vancouver and Prince Canada’s trade competitiveness. Rupert with the inland supply chain and the rest of the continent. The private sector offers insight into the daily challenges of moving goods through and along Canada’s The Ontario–Quebec Continental Gateway is a transportation system. Formal partnerships have vital component of Canada’s multimodal transporta- been established for all three gateways and corridors. tion system and provides a critical link between all Coupled with the national perspective of Canada’s key gateway facilities and also to Canada–U.S. border Gateways, these partnerships assists the Government crossings. The Ontario–Quebec Continental Gateway of Canada to address transportation system needs that is focused on developing a sustainable, secure and are critical to the efficiency of international trade flows efficient multimodal transportation system that sup- and trade competitiveness. ports business opportunities. The APGCI Gateway Performance Table was estab- Canada’s Atlantic Gateway and Trade Corridor is lished in 2008. Its participants represent a cross-section a transportation network that connects North America of major transportation, shipping and labour interests to markets in Europe, the Caribbean, Latin America, operating in the Lower Mainland of British Columbia and and Asia via the Suez Canal. With its deep-water ports, across the Prairies. The Performance Table was set up specialized niche and customized services, modern in response to ongoing stakeholder feedback regard- intermodal transportation network, and partnership ing the overall performance of this supply chain, and to between government and the private sector, the Atlantic assess whether APGCI infrastructure investments were Gateway and Trade Corridor reaches into the economic resulting in performance improvements over time. heartland of North America. The Atlantic Gateway and Trade Corridor Strategy was released in March 2011. Both a private sector and a public sector advisory It was developed through the collaboration of the committee were established for the Ontario–Quebec Governments of Canada, Nova Scotia, New Brunswick, Continental Gateway, to provide advice on public policy Prince Edward Island, and Newfoundland and Labrador, issues and governmental measures, to collaborate on as well as the private sector. the development of the gateway and trade corridor, and to offer a forum for participants to share their expertise, information and insights. Development activities In the east, the Atlantic Gateway Advisory Council provides regional perspectives to support the ongo- Analytical framework ing development of Atlantic Gateway initiatives. The Council consists of 13 private sector representatives Since 2007, Transport Canada, in collaboration with from a broad range of industries in Atlantic Canada. The provinces and other public and private stakeholders, Council works with governments to identify and address has developed and implemented an analytical frame- the issues affecting Atlantic Canada’s international trade work to support the various gateways. Substantial competitiveness, and to ensure the greatest possible analysis has been conducted to identify capacity and long-term benefits to the entire Atlantic Region. demand of the multimodal transportation system, and considerable knowledge has been gained. This analytical framework has led to the identification of issues and Marketing bottlenecks affecting the efficient flow of international In addition to its efforts in stakeholder collaboration, freight, as well as the competitiveness of the transporta- the Government of Canada has been engaged in exten- tion system—both now and in the future. sive marketing initiatives to promote the advantages of the Canadian transportation system—particularly the Collaboration country’s first-class gateways and corridors that enable access to and from the North American market. A key factor in gaining knowledge and gathering relevant information is consultation and collaboration Trade missions have been led by various federal ministers, in partnership with provincial governments and

120 Transportation2011 in Canada Gateways and Corridors 11

the private sector, to Asia, South America, the United Beyond infrastructure States and Europe. Emphasis is placed not only on Canada’s transportation system, but also on the coun- Throughout the development and implementation of try’s significant business opportunities. the various gateway and trade corridor initiatives, transportation system improvements have not been limited More specifically, under the APGCI, the Department to infrastructure investments. In many cases, improve- of Foreign Affairs and International Trade was allocated ments have been identified and implemented to reduce dedicated funding to develop and implement an interna- policy, regulatory and financial barriers, to improve the tional marketing strategy for the Asia–Pacific Gateway business environment for trade growth, and to enhance and Corridor. The strategy included business-to- freight operations at key facilities by way of company- business engagement, a strong presence at international level agreements, application of new technology and transportation and logistics events, targeted media out- establishment of innovative operational practices. reach, and an advertising campaign. When appropriate, Canada’s other gateways were also represented. These significant non-infrastructure improvements to date include modified customs tariff rules allowing Marketing is also a major component of the Atlantic greater domestic use of imported cargo containers, Gateway Strategy and is supported by a dedicated the elimination of the 25% duty on certain foreign- fund. Atlantic Gateway marketing focuses on building built vessels, amendments to the Canada Marine Act, national and international awareness of the gateway’s the elimination of many manufacturing tariffs (Tariff- assets and includes key sectors such as bulk/break-bulk, free Zones for manufacturers), free trade agreements containers and air cargo. Ongoing collaboration with under development (e.g. with the European Union ports and airports in the region has led to the devel- and with India), and the amalgamation of ports in opment and implementation of strategic international the Lower Mainland of British Columbia to form Port marketing initiatives in key international markets includ- Metro Vancouver. ing the United States, Europe, Asia and South America. Participation at key industry events provided Atlantic Gateway ports and airports with venues to identify and Inland ports and logistics hubs develop global business opportunities. Inland ports and multimodal hubs offer opportunities to attract investment and the concentration of value- Infrastructure investments added manufacturing, logistics and other services.

Coinciding with the National Policy Framework for Stra- Successful inland ports and other multimodal hubs tegic Gateways and Trade Corridors, the $2.1 billion exist near strategic transportation infrastructure that is Gateways and Border Crossings Fund and the $1.0 well integrated into global value chains, that has space billion Asia–Pacific Gateway and Corridor Initiative form for development, that offers proximity to suppliers and a special element within Building Canada, the federal markets, and that resides in a regional economy with a government’s overall plan for infrastructure. skilled labour force and concentrations of services that support trade and transportation. Almost $6 billion has been committed to Canada’s gateways and trade corridors from a variety of sources, One prime example of such an inland port is leveraging significant public and private investments. Winnipeg’s CentrePort Canada, a provincial and locally These commitments support the objectives of improv- initiated project to develop a 20,000-acre zone for an ing both the capacity and efficiency of the country’s inland port and trade area around J.A. Richardson transportation system, and advancing the competitiveness of the Canadian economy. Investments support key projects underway or recently completed, such as the South Fraser Perimeter Road and the Roberts Foreign Trade Zones Bank Rail Corridor in British Columbia, a new access Canada offers a unique package of tax programs and policies that road linking the planned new Windsor–Detroit cross- allow any business to operate as if it has its own foreign trade zone ing to Highway 401 in Ontario, modernization of Port (FTZ), anywhere in Canada. Developed by the Department of of Sept-Îles in Quebec, terminal expansions at the Port Finance, these include duty deferral and remission policies, the cus- of Halifax in Nova Scotia and the Port of Belledune in toms bonded warehouse program, and programs for exporters. The programs combine with the fully refundable GST/HST system to New Brunswick. allow unrestricted access to FTZ-like benefits without the requirement of operating within the limited zone of a traditional FTZ.

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International Airport. The project seeks to leverage Next steps Winnipeg’s geographic location on north–south and east–west trade routes, and build a multimodal hub for The APGCI has had many successes in the last five years. international transportation, manufacturing, distribution With federal funding fully committed, significant prog- and warehousing activities. ress has been made on infrastructure projects. Moving beyond traditional bricks and mortar toward competi- Budget 2009 identified CentrePort Canada as a key tiveness measures, the APGCI has also helped ensure priority for federal infrastructure funding, with con- a thriving business environment. Moving forward, to tributions to six projects and operational funding for derive the greatest benefits from its investments APGCI CentrePort Canada’s start-up. A single-window task will focus on deepening relationships domestically and force and outreach program were also launched in internationally and seizing opportunities to expand trade Winnipeg to raise awareness of Canada’s tax and duty with international partners. deferral advantages, including enhanced promotion of Canada’s foreign trade zone-type programs. As for the Ontario–Quebec Continental Gateway, analysis of the multimodal transportation system within Ontario and Quebec continues in order to identify Ensuring continued success impediments and opportunities for more efficient trade. The Government of Canada is working with the pri- Lessons learned vate sector and other key public sector stakeholders to address current and future transportation needs. Throughout the development and implementation of various tasks associated with Canada’s gateways, col- The Atlantic Gateway and Trade Corridor Strategy laboration among public and private stakeholders has includes a balance of immediate measures and longer- been the key to success. While strong partnerships may term directions to position the region’s transportation take considerable time to develop, the ability to identify system to take advantage of global trade opportunities. issues and implement solutions is a demonstration of Core elements of the Strategy guide implementation what can be accomplished when stakeholders collabo- activities, which are well underway. Beyond advanc- rate effectively. ing the infrastructure projects, other activities include further supply chain analysis, focused analytical work, Developing, maintaining, sharing and applying an regional workshops on various issues, international extensive knowledge base of Canada’s multimodal trade missions and marketing efforts. Moving for- transportation system as well as the current and future ward, the Atlantic Gateway Federal-Provincial Officials trade flows it must support amount to a sizeable task. Committee will also continue to collaborate with the pri- The economic environment is constantly changing, vate sector to identify and address policy and regulatory with decisions made daily that impact trade and the issues that affect the competitiveness of the Gateway. transportation system. Staying abreast of these issues and responding accordingly have been key to the gate- More information on Canada’s Gateways is available ways’ success. at canadasgateways.gc.ca. While the National Policy Framework for Strategic Gateways and Trade Corridors represents a national per- 11.2 Supply Chain spective, individual gateway initiatives have addressed needs at both regional and local levels. One essential— Performance but often overlooked—benefit of the gateway approach Monitoring is that gateways share global supply chains. As such, improvements to a specific supply chain in one gateway At the core of Canada’s Gateways and Corridors can benefit another gateway where the supply chain Policy lies a crucial question: are Canadian gateways also exists. and supply chains reliable? Global competitive forces are imposing new standards in transparency and performance accountability in the international transport and logistics arena. Public and government agencies worldwide have somewhat lagged behind the private

122 Transportation2011 in Canada Gateways and Corridors 11

sector in adopting systematic and transparent key per- partnerships that leveraged operational and academic formance indicators (KPI), but KPIs are now rapidly port expertise. emerging across government agencies in the transport sector as essential tools that support a variety of mean- The project began in the fall of 2008 and involved the ingful and legitimate goals, such as setting performance largest Canada Port Authorities (CPAs). The first phase targets, guiding national policy, monitoring continuous of the project sought to implement metrics at container improvement, ensuring asset management account- facilities, while bulk facilities were addressed in a subse- ability, measuring return on infrastructure investments, quent phase due to methodological complexities related and marketing. to bulk operations. Bulk indicators are aggregated by commodity and cover iron ore, coal, minerals (potash Meanwhile, the emergence of global supply chains and sulphur), grain, general cargo, forest products and has brought new challenges to transportation and logis- liquid bulks. All metrics focus on operational aspects of tics—notably the need for a systems-wide approach to port facilities (see Table M30A). performance evaluation. Transport Canada is developing new tools for transportation system performance luidity indicator measurement that better reflect the efficiency and reli- F ability imperatives that Canadian and other companies To evaluate how gateways and strategic trade corri- face in today’s era of global supply chains. dors interact together operationally a fluidity indicator Transport Canada has also devised an integrated was developed. This indicator examines end-to-end approach that seeks to monitor performance and utili- supply chain performance by focusing on the time com- zation of critical gateway assets at both gateway (port ponent. The fluidity indicator measures the total transit utilization indicators) and supply chain (fluidity) levels. time of inbound containers from overseas markets to These initiatives rest on sound partnerships between strategic North American inland destinations via various Transport Canada and participating supply chain Canadian gateways. Initial phases of this indicator proj- partners and leverage an unprecedented level of world- ect targeted inbound container movements for Pacific class expertise. Gateway markets (British Columbia ports). However, future phases will cover inbound movements at other gateways, but also international outbound container Port utilization indicators and bulk movements across all major gateways. With approximately 90% of global trade by volume The fluidity indicator project is multi-phased. Phase 1 transported by sea and waterways, ports are critical monitors transit times of containers departing Shanghai links in global supply chains. Despite the importance of and Hong Kong via Prince Rupert and Port Metro seaports to the global economy, little is known about Vancouver destined for Calgary, Toronto, Montreal or what makes a port truly competitive and a best-in-class Chicago. Total transit times are calculated by summing performer. While no single metric can truly capture the all modal segments of end-to-end movement. No single full complexity of port operations, gateway stakehold- data source (or provider) can capture transit time data ers recognize the need to build a factual, impartial case for the entire container trip; hence, a variety of data for ensuring the competitiveness of Canada’s gate- exchange partnerships are in place with several stake- ways. To do so, a project has been initiated to develop holders. For the most part, the method relies on genuine a set of port utilization indicators at a national level to primary data from private sector carriers supplied on a assist ports in monitoring their operational performance voluntary basis. over time. In terms of shipment delivery time and costs, world- Few studies exist that compare port performance class gateways can offer shippers numerous options, internationally. The current state of practice and research ranging from expedited and premium services to lower- in port performance indicators yields limited opportu- value propositions. For the fluidity indicators project, nities for port-to-port benchmarking and comparison. Transport Canada identified eight different supply chain The primary challenge stems from the lack of standard models (see Table M30B). These represent various definitions and calculations. Port utilization indicators combinations of modes and logistical arrangements, were recently developed and implemented based on including transloading of containers.1 The ‘direct rail’ the principle of methodological transparency and under model is predominant at the two British Columbia

1 Transloading generally refers to the transfer of shipments from international marine containers (20', 40', 45'+) to domestic containers (53').

2011Transportation in Canada 123 11 Gateways and Corridors gateways, accounting for just over half of all inbound Improved supply chain performance can impact the container movements. Direct rail occurs when inter- daily lives of nearly all Canadian consumers. Insightful modal trains are built on-dock at marine terminals and performance measurement can lead to more precise leave the port directly for their final inland destinations. identification of logistics elements needing adjustment, Besides a pure truck transit, direct rail is generally a which can then improve supply chain performance and faster landward option since containers bypass having Canada’s trade competitiveness. to stop at origin rail yards. In the context of that project, Transport Canada estimates that during the year This benefits all gateway users and, ultimately, end 2011, containers averaged 22.5 days of transit between consumers. This type of detailed information is highly Shanghai and Toronto via British Columbia ports valuable and can be leveraged for several purposes, using direct rail, compared to 25.6 days for the trans- including overseas promotion of Canada’s gateways, load model. stakeholder facilitation, policy support, and measuring return on infrastructure investment, among Analysis of transit times by logistical segment reveals others. In gathering performance measurement details— the essential role the marine component plays in overall and to maintain integrity of the data collected—Transport trans-Pacific movement of containers. Indeed, ocean Canada continues to expand the scope of trade transit makes up 65% of the total journey, while port lanes and corridors while supporting effective data dwell and rail transit accounts for the remaining 35% exchange partnerships. of the journey. In other models, drayage—the transport of goods by truck on a short distance—generally constitutes a marginal share of total transit time, despite its 11.3 Transportation, critical role in the overall movement of goods. Logistics and Table M30C presents a sample of the fluidity results Global Value using the direct-rail model for Shanghai to Toronto via British Columbia ports over 2010 and 2011. Western Chains: a Canadian Canadian gateways have achieved a consistent level of Perspective transit time performance from Asia to Central Canadian markets from 2010 to 2011, due to significant gains This section aims to describe the symbiotic relationship on the landside—notably at the port interface (dwell). between global value chains and transportation, with Indeed, the two B.C. ports registered a combined a special focus on the Canadian context. It is not the 23% year-over-year decrease in port dwell times and objective of this section to discuss the drivers and the achieved a remarkable average performance of slightly raison d’être of global value chains (GVCs)2, but simply less than 2.5 days. The performance of Canadian supply to highlight how the geographical extent of global pro- chain partners has helped offset the significant deterio- duction hinges on efficient transportation and logistics. ration of ocean transit times in 2011, thereby allowing GVCs impact the daily lives of every Canadian; given the for overall consistency of total transit times over the central role transportation plays in GVCs, the vitality of past 24 months. this industry is a matter of high stakes to Canada’s ability to prosper as a trading nation. Overall, Transport Canada’s supply chain performance monitoring initiatives support the establishment Transportation is integral to international trade. of KPIs to assist government agencies in enhancing GVCs—also called global commodity chains, global pro- visibility and accountability in oversight of key assets. duction networks, or global supply chains—depend on Transportation and logistics facilitate global trade, and efficient, affordable transportation, logistics and infor- their efficient performance is essential to trade-reliant mation and communications technologies (ICT). Today’s countries such as Canada. Moreover, the nodal role global production activities are transport-intensive and of seaports in global supply chains and international rely heavily on responsive transportation and logistics gateways warrants special attention. Transportation capabilities. There is simply no value-added without the decisions are increasingly made within a broader physical movement of resources, people, intermediate scheme of supply chain management; it is through this and finished goods—or transportation. lens that performance should be approached.

2 For a Canadian perspective, see Sydor, A. (ed.) 2011. Global Value Chains: Impacts and Implications. Foreign Affairs and International Trade. Ottawa.

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Many have argued that the “container revolution” in the international marketplace is directly linked to the of the 1950s underpins globalization as we now know capacity of the transportation sector to support global it.3 Today, 90% of global trade, by volume, still transits value chains. the oceans.4 Since its inception, the container has weathered global economic structural changes and ransportation in global proven to be an adaptive and resilient facilitator of mer- T chandise trade. As containerization celebrated 50 years value chains of service in 2007, the transportation industry strove to adapt to the new trade reality of GVCs. Indeed, 50 Global value chains can be defined as “the full range years after Sealand5 launched the world’s first container of activities undertaken to bring a product or service service, Maersk echoed that innovative spirit by intro- from its conception to its end use and how these activi- ducing in September 2011 the concept of ‘absolute ties are distributed over geographic space and across reliability’ through its Daily Maersk6 service. Maersk’s international borders.”7 But what role does transporta- move recognized the need to adapt to the ever- tion and logistics play in GVCs? In the minds of many, increasing velocity of GVCs and the complete reliability production is often synonymous with assembly, but demanded by shippers. In the rail sector, the concept in a global trade reality this cannot be farther from of ‘precision railroading’ introduced in the past decade the truth. Global value chains span functions well illustrates similar—and necessary—adaptation. Other beyond assembly. transportation sectors have also made adjustments to For a typical manufactured item, value-adding activi- this new global trade arena. Firms have been expand- ties take place from design and conception through to ing from domestic to international, crafting new supply post-consumption (see Figure 11.1). Transportation and chain partnerships, and investing in logistics facilities distribution figure prominently at both pre- and post- and technologies. These transformations represent pro- assembly stages—namely procurement and distribution found changes in the global economy and are reshaping to consumer markets. For example, in the post-production the transport and logistics landscape, both in Canada distribution of goods to market for a flat-screen TV, ocean and throughout the world. transportation costs from Asia to North America are Like many countries, Canada is seizing opportunities estimated at 2% of retail value; for a shirt, 0.85% of in trading with emerging economies showing strong its retail value; while for a tonne of grain these costs growth, such as Brazil, Russia, India and China, com- climb to 40% of the purchase price.8 Another example monly known as BRIC economies. Figure EC16A is fresh lobster, where air transportation from Halifax to illustrates Canada’s total merchandise trade with the Shanghai accounts for only 2% of its retail price.9 These four BRIC economies over the past decade. Both the transport costs are often supplemented by additional pace and magnitude of bilateral trade with China stand logistics costs such as storage or transloading. out and have even dwarfed trade with other BRIC coun- While useful, Figure 11.1 focuses on finished goods tries. As terms of trade under the GVC paradigm are and thereby does not accurately depict the magnitude changing and new opportunities emerge, the appropri- of transportation activity in global value chains. Further ate conditions must be in place for Canada to reach its transportation and logistics activities take place within full GVC integration potential. each of the value-adding stages—particularly in and Global value chains and transportation have a mutu- around the assembly (manufacturing) stage. These ally beneficial relationship. The geographical extent of embedded transportation costs can be further explored global production hinges on efficient transportation and through an example of automobile manufacturing. logistics. Canada’s ability to prosper as a trading nation A typical automobile is made up of approximately

3 See, for instance, Levinson, M. (2006). The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton University Press, as well as Donovan, A. & Bonney, J. (2007). The Box that Changed the World: Fifty Years of Container Shipping. The Journal of Commerce. 4 World Shipping Council (2011). http://www.worldshipping.org. 5 Now owned by Maersk Line (since 1999). 6 See http://www.dailymaersk.com/ 7 Sydor, A. (2011). The Evolution of Global Value Chains. Canada’s State of Trade 2011, Government of Canada, Department of Foreign Affairs and International Trade, Ottawa. pp. 85-101 (Special Feature). 8 Kolding, E.D. (2010). Beyond the Storm: the Industry our Customers Should Ask For. Maersk Line. Presentation made at Transpacific Maritime Conference 2010, Long Beach, March 1, 2010. 9 Price on a per-pound basis. G.E. Simpson & Associates (2012). Air Cargo and the Fish and Seafood Study. Prepared for Transport Canada, January 2012.

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Figure 11.1. Value Creation Along the Value Chain of semi-finished goods, a transportation cost is added cumulatively. Using the tire example, the embedded transport cost of producing rubber is 2.3% (as share of producer price). Then, the rubber must be transported to the tire production plant, a cost that represents 2.1% on top of producer price. The same cycle occurs for

R&D Services the manufacturing of the tire, adding another 0.9% to transport the tire from the factory to the car assembly plant. This cycle continues for the thousands of parts Design Marketing & Sales involved. Superimposed onto this process are border crossings—which can be several, even for a single part. Logistics: Logistics: Added-Value procurement distribution It quickly becomes clear that transportation activities are vital linkages in GVCs. Assembly These embedded transportation costs, however important, generally remain a small share of the final Pre-production Production Post-production retail price of finished consumer goods, due to efficient Value-Adding Activities and affordable transportation and logistics services. In the case of finished automobiles, it stands at an estimated 1.4%. Source: adapted from G. Gereffi, presentation at joint OECD-World Bank workshop on GVCs and Emerging Countries, Paris, September 2010. Transport as a share of producer price naturally varies, depending on the commodity, the geographical location of both inputs and the market and mode(s) of transport 30,000 different parts10 that are sourced, manufactured used. For example, for forest products, transportation and sub-assembled at various locations around the as a share of final producer price stands at approxi- globe. It is not a simple task to measure the number mately 3.9%, while that share for coal stands at 1.1%. of truck trips, rail movements, air cargo shipments, or Generally speaking, bulk commodity supply chains tend ocean container movements involved in the assembly to be more vertically integrated and transport costs of a single automobile, as thousands of individual parts more internalized. In addition, in Canada, an increasing make their way from several countries to a final assem- share of traditional bulks are now being containerized bly point. Each of these intermediate parts has further for export (e.g. forest products, pulse), and logistics will embedded transportation costs in its own manufactur- vary whether commodities are loaded into containers at ing. Figure 11.2 attempts to illustrate this using tires as their source or at port prior to being shipped overseas. one of many intermediate components contributing to the assembly of a finished vehicle. As each successive Every value-adding process bears an embedded stage of production is linked by the physical movement transportation cost. But despite the geographical length- ening of value chains, the proportion of transportation

Figure 11.2. Embedded Transportation Costs of Finished and Semi-finished Manufactured Goods

Procurement Manufacturing Distribution & Sales

2.3% 1.3% 1.4% N/A

Rubber Tire Car Car Dealer Supplier Manufacturing Assembly

Plant Plant

Source: Transport Canada from Statistics Canada (input-output) data

10 From Toyota official website at www.toyota-global.com.

126 Transportation2011 in Canada Gateways and Corridors 11 as a share of total production inputs into manufac- American shippers. Based on preliminary research tured goods remains marginal. In fact, the criticality of conducted by Transport Canada and Industry Canada, transportation and logistics within GVCs against its total logistics costs represent a significantly higher small share in total production costs creates an interest- proportion than transportation costs alone to importers ing paradox. and exporters. In a recent survey, Industry Canada found that “the The transportation paradox top 20% performers in total landed cost12 and on-time shipment are more likely to invest in logistics network The marginal share of transportation costs as a strategies—such as capability to electronically collabo- proportion of the value of goods can be attributed to rate with networks of key suppliers and customers—and advances in global logistics, especially since the advent supply chain modeling applications”.13 The same study of containerization. However, to a large extent, this reports that investments in distribution centres in belies the necessity of reliable transportation and logis- Canada increased by 106% from 2005 to 2010. tics services. This forms the transportation paradox: although transport costs may be small in the overall pro- On a macro-economic scale, these logistics costs duction process, the penalties of poorly performing can become a tremendous liability to a nation’s trade transport/logistics systems can be severe—particularly competitiveness. By facilitating global trade, logistics for producers and consumers. Since transportation capabilities are at the core of a nation’s global com- costs are compounded as value is added to goods, petitiveness.14 This concept applies to an even greater each time an intermediate good is physically trans- extent to developing countries, where logistical capa- ported at any stage of production it risks delays, which bilities can often fall behind export production capacity can result in cost penalties at the receiving end. and become a hindrance to trade. Therefore, while transportation as a share of total input The case of China is particularly interesting. Logistics into manufactured goods can be relatively marginal, the costs as a share of gross domestic product (GDP) stood share of total logistics costs can be high—and is strongly at 18% in 2008.15 This was high compared to devel- dependent on logistics competence. The inability to oped economies, where typical logistics costs were deliver on-time due to a transportation disruption can less than 10% of GDP. Moreover, a decade ago, inland stop production, and the costs behind such a stoppage transport costs accounted for approximately 60% of are significant. the total transport costs from Chinese producers to To better capture this paradox, total logistics costs overseas markets, compared to averages of 15% for should be examined—a comprehensive set of costs Europe and 11% for the United States.16 China’s Central to shippers that include transport costs, among oth- Government recognized this shortcoming and made a ers.11 Taking the total logistics costs view, a shipper’s policy objective to decrease this share in its last two penalty for providing underperforming and unreliable consecutive five-year plans. China’s government also transportation services does not necessarily translate introduced an initiative called the Rejuvenating Program into higher transportation costs but into other induced for the Logistics Industry in February 2009. The same costs: additional lead times, stock-out costs, additional year, China announced transportation infrastructure safety stocks and inventory costs, opportunity costs of investments of no less than $290 billion U.S. (or 6% of in-transit inventory, etc. A truck, ultimately, is inventory its GDP). China’s logistics industry has come a long way on wheels, and managing and maintaining inventory to support its booming export trade and, despite these bears a cost. But these buffer costs are difficult to quan- shortcomings, no other country in history has ever han- tify and add uncertainty in the management of supply dled the cargo volumes that China handles today. chains that costs billions of dollars each year to North

11 These costs are generally made up of: (1) transportation costs, and (2) inventory costs, including (but not limited to): direct transport costs, in-transit inventory carrying costs, ordering costs, cycle stock carrying costs, safety stock carrying costs and stockout costs. From Chow, G. (2008). Total Logistics Cost Model: Conceptual Framework. University of British Columbia Sauder School of Business. 12 A concept similar to (yet narrower than) total logistics costs. 13 Industry Canada (2011). Global Business Strategy and Innovation: A Canadian Logistics Perspective. In partnership with Canadian Manufacturers and Exporters and Supply Chain and Logistics Association of Canada. http://www.ic.gc.ca/eic/site/dsib-logi.nsf/eng/h_pj00528.html. 14 The World Bank (2010). Connecting to Compete: Trade Logistics in the Global Economy. Washington. 15 KPMG (2008). Logistics in China. http://www.kpmg.com.cn/en/virtual_library/Property_Infrastructure/LogisticsChina.pdf 16 Carruthers, R., Bajpai, J.N. & Hummels, D. (2003). Trade and logistics: an East Asian perspective, in K. Krumm & H. Kharas (eds) East Asia Integrates: a Trade Policy Agenda for Shared Growth, Washington: the World Bank, pp.117-137. This supports the so-called ‘first mile-last mile’ argument, namely that the first and last ground transportation steps are critical to end-to-end performance.

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In terms of costs, Canada’s logistical performance Supply chain collaboration and partnership is being offers both challenges and opportunities. The higher driven by both private and public sector initiatives. At logistics cost associated with doing business in Canada the public sector level, the National Gateways and Trade compared to the United States was confirmed by a Corridors Strategy has proven a powerful metaphor to joint report by Industry Canada and the Supply Chain incite and foster greater levels of collaboration across and Logistics Association of Canada.17 The survey- the entire supply chain. The most advanced of the gate- based study revealed that total logistics and supply ways, the Asia–Pacific Gateway and Corridor Initiative, chain management costs for the Canadian economy captures the spirit of collaboration between all levels of increased by 3% from 2005 to 2007. Compared to government and private sector stakeholders. Ongoing the U.S., total logistics costs were slightly higher for collaborative platforms that have yielded real opera- Canadian manufacturers and wholesalers but some- tional benefits include the Gateway Performance Table what more significantly so for Canadian retailers in (performance measurement), the Winter Contingency 2007. In other words, all else being equal, running a Planning Table (resilience) and the Asia Pacific Skills firm’s global operations out of Canada costs more in Table (skills and knowledge base). logistics than out of the U.S. This finding supports the need to target measures to enhance Canada’s competi- In the private sector, 2010 and 2011 were marked by tiveness, whether from a trade, logistical, or information an unprecedented number of service level agreements and communications technology capability viewpoint. between marine terminal operators, Class I railways The study also demonstrates how Canadian firms con- and port authorities in a consolidated bid to enhance tinue to outsource more of their activities in low-cost the operational performance and competitiveness of countries—notably in China—making them more sensi- national gateways and corridors. Such agreements tive to changes in international transportation costs and were put in place at all four major container ports start- energy prices, although acknowledging that locational ing in April 2010, and provide service level guarantees dynamics of offshoring may have changed since then. to supply chain partners, backed by key performance indicators. These agreements have led to concrete results on both coasts: a reduction in the range of 20 Supply chain collaboration to 25% in port dwell times at west coast ports18 during 2010 and similar reductions at the Port of Halifax How are GVCs reshaping the Canadian transportation from January 2010 to November 2011.19 A general trend and logistics sector? In the global marketplace, sup- among Canadian transportation service providers is to ply chain management becomes a key differentiator become more transparent and accountable for their for trade-reliant economies like Canada. Global value performance, which speaks to improved collaborative chains are forcing us to rethink conventional ways we relationships and better overall governance of supply look at competition. Two competing value chains may, chains. In fact, the Canadian gateway model is increas- for example, use the same airport but different airlines ingly recognized internationally as a best practice.20 and ground transportation providers to bring goods to market. At the core of GVC competitiveness is governance—under what arrangements the various supply Canada’s perspective chain partners come together to differentiate their offerings and provide a competitive value proposition to the Transportation and logistics are at the very core of market. Although Canadian transportation and logistics global value chains, which aim for the seamless flow firms are adapting to the realities of GVCs in numerous of commodities, people, knowledge, information, capi- ways, collaborative partnerships are a strength that dif- tal and goods. An embedded transportation cost lies ferentiates Canada on an international scale. in all finished and semi-finished goods. Transportation becomes value-adding when it is reliable and in sync

17 Industry Canada and The Supply Chain & Logistics Association of Canada (2008). State of Logistics: the Canadian Report 2008. http://www.sclcanada.org/ 18 Based on data from Transport Canada collected under Port Utilization Indicators project. 19 Port Authorities of Vancouver Fraser, Prince Rupert, Montreal, and Halifax (2011). Vancouver Fraser Port Authority, Prince Rupert Port Authority, Montreal Port Authority, and Halifax Port Authority Submission to the U.S. Federal Maritime Commission. December 2011. http://www.portmetrovancouver.com/Libraries/ABOUT_News_Press_Releases/FMC_Submission_-_Dec_21_2011.sflb.ashx 20 See, for example, Kulisch, E. (2011). Knatz: U.S. at Fault for Canada Diversion. American Shipper, October 26, 2011. See also a number of U.S. submissions to the Federal Maritime Commission Notice of Inquiry Docket No. 11-19: U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports, www.fmc.gov.

128 Transportation2011 in Canada Gateways and Corridors 11

with all stages of production, but can become value- of duties on foreign-built vessels to help modernize the subtracting when it is underperforming and unreliable. country’s domestic fleet, an international re-branding of Canada’s foreign trade zone-like programs, as well GVCs are reshaping the transportation land- as the implementation of a supply chain performance scape in Canada and worldwide by heightening the monitoring initiative. time-sensitivity of shipments that must meet leaner manufacturing requirements. A horizontal end-to-end This section has addressed transportation’s role within integrated approach to transportation services and GVCs, but public policy challenges relating to GVCs infrastructure becomes a more appropriate frame- reach far beyond transport and logistics.23 Other chal- work to examine domestic transportation systems. In lenges facing developed economies include attracting such a context, consistency, reliability and visibility of and retaining talent, consequences of deindustrializa- transport and logistics services become premiums for tion on labour, fostering innovation and partnerships, shippers. Improvements in supply chain performance investing in smart infrastructure, streamlining inter- can often be traced to the supply chain’s governance, national business practices, and reexamining fiscal where stakeholder collaboration can have a significant policies—all areas that will determine Canada’s role in effect. Indeed, research shows that GVCs with sound tomorrow’s global economy. Beyond Transport Canada, collaborative frameworks are likely to perform best21 in other federal departments such as Foreign Affairs and the global marketplace. GVC governance—how various International Trade, Export Development Canada, stakeholders come together to create the best value Industry Canada, Agriculture and Agri-Food Canada, proposition in the marketplace—is critical in defining Human Resources and Skills Development Canada, and the long-term competitiveness of GVCs in Canada. Canada Border Services Agency are also actively exam- Lastly, the international nature of GVCs has also placed ining Canada’s role in GVCs. an emphasis on the importance of trade facilitation processes. Such things as customs and border processes Global value chains offer both challenges and oppor- play critical roles in Canada, given its geography and tunities for Canada, which is well positioned to respond. the weight of U.S.–Canada trade. The Government of Canada is committed to providing competitive, reliable and secure gateways in support Today’s transportation decisions are increasingly of its international trade goals. It is Transport Canada’s being made within a broader context of seamless value- mandate to ensure that Canada’s transportation system adding activities. Many of these new imperatives are is efficient, safe, secure and environmentally sustainable being addressed under Canada’s National Gateways to ensure Canada’s integration into GVCs as well as the and Trade Corridors Strategy. The Government of country’s long-term trade economic prosperity. Canada has a role to play in fostering and facilitating quality dialogue with the private sector to define optimal conditions for the efficient, safe, secure and sustainable movement of goods. In 2009, Transport Canada introduced the concept of the value-added gateway as a “strategy that focuses on helping Canadian companies to further exploit opportunities such as intermodal transportation, transshipping, warehousing, logistics, information and communications technologies, finance, and skills development”.22 Among other things, the federal government’s support for the value-added approach was reflected in changes to the tariff and treatment of international marine containers, the elimination

21 Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The Governance of Global Value Chains. Review of International Political Economy, 12(1): 78-104. 22 Transport Canada (2009). Gateway Corridor News. 2009 Edition, Ottawa. http://www.pacificgateway.gc.ca/gateway-news-2009.html 23 For a full discussion on this topic, see: Organization for Economic Co-operation and Development (2008). Staying Competitive in the Global Economy: compendium of studies on global value chains. http://www.oecd.org/document/62/0,3746,en_2649_34173_40815102_1_1_1_1,00.html

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Outlook, Trends and Future Issues 12

From maintaining the country’s transportation infrastructure and gateways in a time of constrained spending to taking advantage of new technologies for greater safety and security, change will be the constant in Canada’s transportation future.

12.1 Introduction opportunities will require all stakeholders make strategic choices and take deliberate action that is predicated In the coming years, Canada’s transportation system upon sound analysis, respect for each other’s fields of will continue to face previously identified challenges, responsibility, and effective collaboration. such as a trade-reliant economy, evolving demogra- phy and a relatively small, largely urbanized population spread over a vast area. Canada must remain competi- 12.2 Global pressures tive and align itself with global trade opportunities. The rise of emerging economies such as Brazil, Russia, India and China (BRIC) has reshaped global business Globalization models and value chains, driving demand for raw mate- Global trade will continue to intensify demand for rials and energy. Emerging economies—as well as transportation, while the harvesting of Canada’s natu- Pacific Rim countries—will remain key players on the ral resources, including future resource developments, global economic agenda. The resulting pressures on will also increase demand on the transportation system. the world’s resources, renewable and non-renewable More industrial supply chains will become integrated alike, will impact the price of global resources; coun- globally, and the pressure to reduce transportation tries with resource potential; and where and how trade and logistics costs—while maintaining the highest takes place. This section takes a qualitative look at standards of efficiency and reliability—will drive deci- the challenges that lie ahead for Canada’s transporta- sion making. In Canada, transportation will continue tion system. to support increasingly diversified networks of trade in Through its legislative and regulatory responsibilities, order to sustain economic growth and maintain a com- Transport Canada currently supports the efficiency, petitive advantage. safety, security and sustainability of the national trans- The competitiveness of global trade networks that are portation system, and helps ensure that Canada’s important to Canada can be modified by strategic trans- system is well integrated with global transportation net- portation infrastructure investments within or outside works. Supported by a modern and responsive policy the country. An example of such an outside of Canada and regulatory framework, that system can substantially investment is the expansion of the Panama Canal, a contribute to long-term economic prosperity. That said, 77.1-kilometre shipping lane that opened in 1914 to cut all partners have a role to play, including the federal, across the Isthmus of Panama, connecting the Atlantic provincial and territorial governments, and municipali- and Pacific Oceans. The maximum size of ship that ties that may own, operate or regulate aspects of the can pass through the Canal is determined by the size of transportation system. the locks. For Canada’s transportation system to remain successful The Canal has been a key contributor to the integration and efficient, each level of government and the private of the world economy and important to Canada specifi- sector need to excel in their respective roles, respect the cally. Its opening prompted the construction of the first boundaries that frame these roles and coordinate their grain silo at the Port of Vancouver in 1918 for shipping actions to advance their activities and work towards a Canadian grain to Europe. Today it supports Canada’s common goal. Successfully positioning Canada’s trans- growing trade between its East Coast, St. Lawrence and portation system to better respond to challenges and

2011Transportation in Canada 131 12 Outlook, Trends and Future Issues

Great Lakes ports and Eastern Asia, offering an efficient is likely to also occur through closer ties with Central alternative to transiting through the Suez Canal. and South America. Shifting trade patterns will force infrastructure providers—such as ports and terminal Currently, close to 40% of container ships are too large operators, and railway and trucking companies—to for the Canal. A $5.25 billion dollar enlargement scheme realign their service offering and increase their ability has been approved by the government of Panama and to process larger vessels. The trade supply chain will is in progress, with 2015 targeted for completion. Two require a continuous push for smooth, seamless inte- new flights of locks to be built parallel to, and operated gration and cooperation between the marine, rail and in addition to, the three existing flights of locks—namely road sectors. The United States will, however, continue Miraflores, Pedro Miguel and Gatùn—will allow more to remain the country’s prime trading partner, and initia- transits and larger ships, doubling the Canal capacity. tives such as Beyond the Border will help streamline the A wider Panama Canal may enable more ships from transborder movements of goods. Asia to serve the midwest markets through ports on the Atlantic seaboard, while also encouraging ships International passenger traffic from Europe to serve western markets via Pacific Coast ports. Any in-depth analysis of the impact on Canadian Emerging economies in Asia and Latin America are ports from the widening of the Panama Canal must also expected to grow at a faster rate than long-standing take into account efforts by the Suez Canal to attract industrialized economies such as those in Canada, the traffic between Asia and North America, railways pro- U.S. and Europe. This represents a significant growth posed by China between Columbia’s Atlantic and Pacific opportunity for the airline industry and its stakehold- coasts, the eventual opening of a Northwest Passage ers. The Asian presence in the global travel market, in the Arctic, and continuous improvements in the sup- particularly China, is expected to increase, with China’s ply chain velocity and reliability of Canada’s west coast planning to build 45 new airports by 2017 and to expand ports which can accommodate larger ships—providing existing facilities. significant time and cost savings compared to routing ships through the Panama Canal. The future of the airline industry will be influenced by factors such as competition; the role of low-cost carriers; In coming years, global integration and aviation and and the ability of legacy, full-cost carriers to adjust to maritime alliances1 will in part govern adjustments to changing market conditions. Airlines will continue to rapidly changing market conditions; they will remain make the most of opportunities arising from emerging drivers of innovation, imposing breakthroughs in tech- economies without neglecting their mature markets, nology that support lower logistics costs, enhanced which are expected to grow at a slower pace. efficiency and reliability objectives. Increased air traffic will translate into operating Integration across natural boundaries increases the efficiencies at the carrier level—such as right-sizing risk of disruptions resulting from human activity or natu- aircraft capacity to fit the market (e.g., larger planes ral disasters. Global integration compels governments for larger volumes), modernizing fleets with more fuel- to focus on the resilience of their infrastructure networks, efficient aircraft and possible substitution of smaller and to adapt policies so they can rapidly respond to dis- regional jets with more fuel-efficient large turboprop air- ruptions and provide support when they occur. craft. It will also promote the establishment of a greater number of Open-Sky air service agreements, as encour- International freight traffic aged in Canada’s Blue Sky Policy (see Section 6.4). Demand for international air transportation will be Canada’s merchandise trade has diversified, and the driven by a number of factors, including increased inter- country’s international trade policy aims to continue national business ties, greater desire by Canadians to this trend, with the government embarking on numerous explore the world and improvements in the Canadian trade diversification initiatives since 2007. Budget 2012 tourism offer. However, one important factor remains indicated the desire for expanded trade with China, and immigration, which is a strong contributor to air trans- trade negotiations with the Trans-Pacific Partnership, portation as it creates a new market for visiting relatives India and the European Union. Trade diversification and friends. These types of travel are particularly

1 A type of joint marketing effort by either airlines or shipping lines

132 Transportation2011 in Canada Outlook, Trends and Future Issues 12 significant in markets with large immigrant populations, such as Canada-India or Canada-Morocco. Statistics Transportation Policy in Germany Canada predicts that by 2031, nearly half of Canadians While Canada addresses its future policy challenges, other countries aged 15 and over will be foreign born, or will have at are refocusing their national transportation policy and can inspire 2 least one foreign-born parent, up from 39% in 2006. more actions to ensure the competitiveness and responsiveness of This is expected to create additional demand for air Canada’ transportation system. Interesting parallels can be drawn travel to Southeast Asia, China and the Maghreb coun- between Germany and Canada: while Germany’s economy is more tries from where this influx of new Canadians is expected than twice the size of Canada’s and tends to do its utmost to seek a to originate. compromise between state intervention and a market economy, just like Canada, it is an export-focused nation strategically located at Between 2012 and 2025, the total number of passen- the heart of a large consumer market. gers carried by the Canadian air transport industry is In November 2005, the German Federal Government agreed to con- expected to increase at an average annual rate of 3%, tinue consolidating Germany’s leading position as a logistics hub, driven by strong growth in overseas flights—particularly promoting Germany’s competitive advantage, and improving the to China, India, Brazil and other emerging econo- efficiency of the transportation network. Following this, the Federal Minister of Transportation developed the Freight Transportation and mies. The average aircraft size for Canadian carriers is Logistics Master Plan by means of a broad consultative dialogue expected to climb from today’s 74 seats to 95 seats by involving more than 700 participants, including all levels of gov- 2025, driven in part by the replacement of Air Canada’s ernment and the European Union. This led to the publication of the B-767 with the B-787 and Westjet purchase of 20 to 2008 Freight Transport and Logistics Master Plan, which brought 45 new Bombardier Q400 NextGen turboprop aircraft. forward the 2010 Action Plan. However, increased demand will exceed the additional Some of the issues brought to the forefront by Germany’s plans capacity provided by larger aircraft, translating into a include developing a port and airports strategy, marketing predicted annual increase in aircraft movements of more Germany’s competitive advantages, encouraging a shift from truck- than 1% per year on average over the next 20 years. ing to rail and inland marine, segregating passenger and freight traffic, optimizing infrastructure use, developing urban logistics Growth in the industry must be fully managed to ensure initiatives, fostering training and good working conditions, and no increased exposure to accident risk. ensuring that freight transportation is done in an environmentally responsible manner. Cross-border passenger traffic should experience an increase in volume as both Canada and the United In spite of the significant differences between Canada’s and States work on facilitating passenger movement through Germany’s transportation system, the nature of their trade, and the solutions advocated or put forth by each country, there are also the use of enhanced driver’s licences that permit driv- numerous parallels in the issues facing each, especially with respect ers to cross the border, programs such as NEXUS for to efficiency, environmental sustainability and in positioning each frequent travellers, and customs pre-clearance of pas- country as an important logistics hub in the global value chain. sengers across all modes. In November 2006, Advantage Canada—a federal government plan to help Canadians build a strong economy—comprised a transportation infrastructure component designed to create modern, Perspectives on Economic world-class infrastructure to ensure the seamless flow of people, Framework policies goods and services across roads and bridges, through ports and gateways, and via public transit. In the same period the Asia-Pacific Within the global marketplace, an integrated, efficient, Gateway and Corridor Initiative was launched as the first application of the national policy framework for strategic gateways and clean, safe and secure transportation system will trade corridors. This framework—as well as other efforts on the part remain a significant competitive factor, helping create of Transport Canada to maintain a modern policy framework and jobs, stimulating economic activity and investment, and articulate a national transportation vision with its partners—under- improving quality of life for Canadians over the next line Canada’s desire to ensure its transportation system keeps pace decade and beyond. Canada’s gateway strategy has with the global economy and plays its critical role in moving pas- been conducive to the adoption of a ‘transportation sengers and goods in an efficient, safe, secure and environmentally sustainable manner. Much like Germany, Canada has determined system’ perspective instead of a modal one. Meeting the that it cannot remain complacent if it wishes to prosper and has taken challenges of the 21st century will require sustaining such tangible steps to evolve its transportation policy and infrastructure. a perspective as well as integrating more effectively transportation-related priorities across levels of government.

2 See http://www.statcan.gc.ca/daily-quotidien/100309/dq100309a-eng.htm

2011Transportation in Canada 133 12 Outlook, Trends and Future Issues

In the past several years, Canada’s perspective on transportation has shifted from an emphasis on each of Table 12.1 the four modes—air, rail, marine and road—to a horizontal and holistic ‘system-wide’ view, following freight and Canadian Trends in Transportation Sector Air passengers end to end through increasingly seamless Pollutant Emissions (1990–2009) connections. That view will be important to meeting the Percentage challenges of the 21st century, as will the further integra- Change in tion of transportation-related priorities within all levels Transportation transportation- of government. Taking an operational approach (which Criteria Air Share of Total related looks at end-to-end supply chains and cost internaliza- Contaminant Emissions (2009) emissions tion) rather than one focused on simply expanding the (CAC) (1990-2009) system seems to be a practical way forward. As well, Including Excluding decision-making processes may have to be revisited to ONS ONS allow for faster responses to change as it occurs. Fine Particulate 5% 24% -35% Global integration compels governments to take new Matter (PM2.5) or different policy approaches. For Transport Canada, Sulphur Oxides 6% 6% -48% this means helping ensure that Canada’s transportation (SOx) system is safe and secure, with policies that are framed Nitrogen Oxide 52% 56% -27% around a seamless integration with global transporta- (NOx) tion networks. Transport Canada’s role also comes into Volatile Organic 2% 29% -48% play in relation to the efficiency and environmental per- Compounds formance of the national transportation system, which (VOC) is instrumental in supporting the country’s socio-eco- Carbon 68% 75% -44% nomic agenda. Monoxide (CO) Global economic uncertainty, an accelerating pace of technological changes, plus real and perceived security Source: Environment Canada, 2011, National Pollutant Release Inventory. risks are going to provide challenges for strategic investment decisions. In addition, many developed economies are facing fiscal constraints that limit their flexibility. Yet GHG emissions are expected to continue to grow but in this environment, Canada must target transparency, at a slower pace—an average of 0.5% per year. In a predictability and stability in its policies and regulations case like this, transportation GHG emissions would go to enjoy competitive advantages and to become more from 171 Mt of CO2 in 2008 to 180 Mt of CO2 in 2020, a attractive to foreign investors. Government policies, leg- growth expected to come mainly from a 17% and 31% islation and regulations (at all levels) will have to respond increase respectively in freight trucking and air pas- to medium- to long-term changes in origins/destination senger activities’ GHG emissions, assuming continued of both freight and passenger international traffic—with fossil fuel energy use by both modes. a likely focus on market forces and user-pay principles as well as transportation system integration. In 2009, excluding emissions from open and natural sources (ONS) such as emissions released from wildfire For Canada’s transportation system to remain efficient, or dust from construction activities and unpaved roads, clean, safe and secure, public and private transportation the transportation sector accounts for 75% of total car- stakeholders must continue to work together effectively bon monoxide (CO) emissions, 56% of nitrous oxide and transparently—coordinating their respective activi- (NO ) emissions, 24% of fine particulate matter (PM ) ties based on sound analysis, exchange of information, x 2.5 emissions, 6% of sulphur oxide (SOx), and 29% of vola- open communication and effective collaboration. tile organic compounds (VOC) emissions. All transportation-related air pollutant emissions fell Perspectives on environmental policies over the 1990–2009 period, as illustrated in Table 12.1. Between 1990 and 2009, there was an overall decrease Between 1990 and 2008, total transportation GHG in the amount of air pollutant emissions from the trans- emissions grew at an average of 1.9% per year, or 40% portation sector. Specifically, fine particulate matter and overall, from 122 Mt to 171 Mt of CO . During the 1990– 2 nitrogen oxide emissions declined by 35% and 27%, 1999 period, GHG emissions grew by 19%, compared respectively. As well, sulphur oxide, VOCs and carbon to 16% during the 2000–2009 period. Transportation monoxide all decreased by approximately 45%.

134 Transportation2011 in Canada Outlook, Trends and Future Issues 12

Perspectives on safety policies and regulations—including for the global aviation and marine communities—and leverage knowledge and Canada has experienced a decade of decreasing accident expertise to influence and advance worldwide aviation rates across all modes, as shown in Table S1. Expected and marine safety while further solidifying the country’s future traffic growth in the transportation industry could place as a transportation safety leader. Bilateral/trilat- increase the risks of accidents and incidents, which will eral continental road and rail safety agreements are also require intensified efforts to improve safety in order to to be pursued. maintain Canada’s enviable low accident rate. To do so, Transport Canada has to improve its understanding Perspectives on security policies of risks and causes of accidents. Such knowledge will lead to improved surveillance programs tailored to pre- Transportation systems will remain key targets for ter- identified company risk factors. rorist and extremist groups due to the potential for both Transport Canada must continuously strengthen mass casualties and economic, psychological and polit- its Safety Management Systems (SMS) with lessons ical disruption. Terrorist groups are generally displaying learned, feedback from front-line inspectors, updates of patience and determination in their operational plan- SMS guidance material, inspector training tied to sur- ning, with attempted attacks around the world over the veillance procedures, and information sessions across past five years illustrating continued efforts to defeat or Canada on SMS implementation and regulatory obli- bypass transportation security regimes. gations. SMS is a key to the robustness of Canada’s Transportation security technology and method- transportation safety regime. ologies must continuously evolve, primarily in response To date, Canada’s largest air passenger carriers and to terrorist plots. Each time a change is introduced, new certified Canadian Air Navigation Service providers training for security inspectors and—in some cases—a have completed SMS implementation, as explained in new regulatory approach is required. Transport Canada Section 6.6. Canadian airports are expected to have will have to develop formal and structured curricula with completed implementation by the end of 2012. With increased focus on on-the-job training in a less pre- SMS in all regulated civil aviation organizations, the scriptive regulatory environment and with risk-based emphasis will shift from adoption to refinement and oversight. The education approach has to be structur- ongoing improvements. ally cost-efficient, integrated and innovative, and must balance the need for traditional in-class training with It will remain important for Transport Canada’s virtual classrooms and e-learning. transportation safety program to stay aligned with those of its trading partners and with international transporta- Security in the aviation sector in particular has tion standards in keeping with technological advances. advanced with the application of new technologies, Because aviation and marine safety goes beyond coupled with evolution in training and heightened use Canada’s borders—as do rail and road transportation of threat-risk analyses to identify priority areas. Since safety—Canada must continue to engage in bilateral, 2009, the majority of threats to surface transportation trilateral (Canada/USA/Mexico) and multilateral discus- have been experienced in high conflict zones or areas sions with other transportation authorities. Transport of civil unrest, with some one-off exceptions that do not Canada must also continue to actively participate in pro- demonstrate a continued pattern. cesses seeking harmonized transportation standards The Beyond the Border declaration and action plan is expected to change the way security impacts transportation operators when moving goods across the Canada-U.S. border. For instance, an integrated cargo Safety Management Systems security strategy with common standards for screen- Since the 1940s, technological improvements have contributed to the ing inbound air and marine cargo at the first point of steady decrease in accident rates. The majority of today’s accidents arrival in North America is under development under the are attributed to human or organizational factors. Strengthening the principle “cleared once, accepted twice”. This will allow safety culture within aviation organizations represents the future the same cargo transported by rail or truck to be given focus of accident prevention in aviation. SMS offers the most accelerated passage across the land border, streamlin- promising means of reducing risks generated by human and organizational factors. ing and simplifying border and security processes and reducing the burden on industry.

2011Transportation in Canada 135 12 Outlook, Trends and Future Issues

Where Canada plays host to major international industry. While the inclination to travel changes with events, additional measures to reinforce the secu- age, distance travelled and destination choice, it also rity of Canada’s transportation system are required. varies by age cohorts, with younger generations often Transport Canada, in concert with the RCMP, local law choosing to travel longer distances and older genera- enforcement and other strategic partners, took steps tions mixing both short and long-haul travel. Evidence to enhance transportation safety and security for the suggests that the coming generation of Canadian 2010 Vancouver Winter Olympics and Paralympics, and seniors will be healthier, wealthier, more independent, for the 2010 G8/G20 Summits held in Canada; the 2015 better educated, and more active than preceding gen- Pan-American Games in Toronto will likely require the erations. Consequently, the seniors’ share of travel is same. To prepare for such events as well as other secu- expected to increase in coming years. rity-related emergencies or scenarios, Transport Canada conducts and participates in international, whole-of- Demographic information shows a positive government, departmental and industry-led exercises on relationship between ageing and the incidence of dis- air, marine and surface security, ensuring that all stake- ability. Disability implies special transportation-related holders are ready to respond to emergency situations needs depending on the nature of the disability; e.g., affecting Canada’s national transportation system. hearing, vision, speech or mobility. As mobility impairment increases with age, Canada’s ageing population increases demand for accessible transportation ser- 12.3 Domestic pressures vices. In 2006, 4.4 million Canadians (14.3%) reported having a disability, including hearing, vision, speech, Although globalization has undeniable impacts on learning and mobility disabilities. Of seniors, 1.7 million transportation in Canada, there are a number of sig- (43.4%) reported having a disability, with mobility, hear- nificant domestic challenges as well. This sub-section ing and vision impairments being the most prevalent; examines some of these and their implications for this increases to 53.3% for persons 75 and over. domestic demand and supply of transportation services. Statistics like these are not unique to Canada. The United Nations has projected that the number of people Demographics 65 and older worldwide will increase from 420 million in 2005 to 835 million by 2025. By 2050, it is projected A number of demographic trends with transport that there will be almost 2 billion people 60 years and ramifications are expected to continue in coming years, older, or about 22% of the population (United Nations). including the ageing and increasing urbanization of Because mobility impairment increases with age and the Canada’s population. Canadian population will age dramatically over the next The ageing population—a worldwide trend—has 20 years, a significant increase in the demand for acces- also established itself in Canada. The proportion of sible transportation can be expected. Disability rates for Canadians 65 years and over will increase substan- persons aged 65 and over are three to five times higher tially, not slowing down until some time between 2036 than those 25 to 54 . and 2056. The country’s demographic trends are likely Mobility will be more important to Canadians aged 65 to increase passenger traffic, with intra-urban travel in and over. As their numbers increase, adjustments will large metropolitan areas topping the list of transporta- be required to transportation infrastructure and related tion challenges, and accessibility a key consideration services to compensate. Wealthy and healthy seniors given the ageing population. According to Industry expect to travel not only to access activities and social Canada forecasts for the Canadian tourism sector, services locally, but to make longer trips to visit family total arrivals in Canada by all modes of transportation and friends, and to travel for pleasure both domestically are expected to increase by 21% between 2010 and and internationally. 2020, while travel by seniors (those 65 and over) during the same period is expected to increase by 45%—an While Canada’s population growth has remained increase from 19% to 23% of the total number of travel- steady since the 1980s, around 1.1% per year, this pop- lers entering Canada. ulation growth is highly concentrated in certain regions, and more specifically in thelargest metropolitan areas, The propensity to travel differs by age but is highly which is already resulting in intra-metropolitan transpor- correlated with financial situation and the availability of tation bottlenecks. These challenges will remain and will leisure time. Consequently, the senior and baby boomer need to be addressed, as urbanization will intensify in populations are an increasing market for the tourism the future. This may translate into increasing demand for

136 Transportation2011 in Canada Outlook, Trends and Future Issues 12 accessible transportation services, accommodating mobil- Energy supply and use in transportation ity-impairment adjustments to transportation infrastructure and services, addressing intra-metropolitan transporta- The planet’s large and growing population is placing tion bottlenecks, and working with industry stakeholders greater pressures on limited energy resources for trans- to develop strategies to attract and retain employees in portation. Transportation demand for energy, specifically, transport-related job opportunities. These demo- will continue to be met largely by fossil fuels in the mid- graphic-driven pressures will take place in an upcoming term, and likely at greater cost. All modes of period of uncertain economic times and restrained pub- transportation in Canada are highly dependent on lic expenditures. petroleum-derived fuels and will need significant technological breakthroughs to reduce consumption. Transportation workforce and expertise Energy has environmental consequences, and also creates equity issues. In the context of foreseeable The demographic outlook highlighted above will also energy price increases, the most disadvantaged—both impact the human resource availability of transportation those dependent on automobiles and those who do not activities and operations. As the population ages and have vehicles of their own—may see their mobility and an increased portion of today’s workers retire, there will accessibility limited as higher energy costs translate into be a smaller supply of skilled professionals to take their higher transportation costs and product prices. place. As well, many prominent Canadian university researchers and professors in the transportation field Public and international pressure to minimize the are approaching retirement, which has potential implica- environmental impact of economic activity and pro- tions beyond the university setting given the importance mote clean air and clean energy agendas, coupled with of academic research to innovation and the training of escalating conventional energy prices, will help drive new transportation professionals. the development of alternative energy sources including wind, hydrogen cells, solar and bio-fuels. Continued University-level transportation programs may have advances in technologies will be critical to boost future difficulty attracting students as these programs are fuel efficiency and energy production levels. scattered widely across a few institutions competing to win enrolments, graduate students and funding. In On the energy supply side, Canada will not be exempt some regions, the effects of this have been mitigated from the pressures to exploit oil and gas found in remote successfully by establishing collaborative research and challenging environments, including the complex networks or clusters. This is the case with aerospace Arctic area. Projects such as the Northern Gateway in Quebec, automotive in south-western Ontario, and pipeline project will increase maritime traffic and may marine on the east and west coasts. Some of the more put additional pressures on the regime for responding successful research models also involve partnerships to oil spills. with industry or local governments, maximizing available expertise and ensuring the practical application of ransportation infrastructure research results. T Traditional transportation careers, particularly at the Ageing transportation infrastructure will remain an issue, technical level, have lost some of their appeal among as maintenance and upgrades are costly; however, younger generations, making it a challenge for employers short-term decisions to defer maintenance translate into to attract and retain new skilled employees. Upgrading greater rehabilitation costs in the future. the skills of current workers is also a higher-profile con- Some economically positive decisions can add to the cern today than in the past due to the pace of technological pressure on Canada’s transportation infrastructure, as change and new specializations in information and com- is the case in the 2011 federal government decision munication technologies necessary for efficient to award a $25-billion shipbuilding contract to Irving transportation. For some transportation undertakings, Shipbuilding Inc. of Halifax for the construction of new the flexibility and foresight to embrace change and the navy and coast guard vessels over the next 20 to 30 anticipated large-scale exodus of workers into retirement years. The project’s economic benefits for Nova Scotia present a unique opportunity to replace a portion of the are undeniable, but the scope of work will stress the transportation workforce with technology and focus on existing transportation infrastructure in terms of moving innovation to achieve productivity improvements. materials, equipment and workers to and from the ship- yard in downtown Halifax. At the same time, the project

2011Transportation in Canada 137 12 Outlook, Trends and Future Issues will provide an opportunity to address some of the sup- Sustainable transportation ply chain imbalances in the region, where, traditionally, outbound volumes far exceed inbound volumes. Sustainable transportation will be a particular challenge in the coming years, and internalization of costs will Infrastructure issues span the range of transportation become increasingly important. Transportation costs modes and services. Public transit will face challenges will have to take into account the social impact of trans- directly associated with ridership and funding. For rail portation, which may favour some modes over others. freight, despite recent investments by the private sec- User pay principles could be expanded beyond the tor, capacity is often limited, particularly in Western financial cost to look at important social costs, such as Canada. Commercialization and privatization of the safety and air, water and soil pollution. aviation sector have resulted in significant investments funded by users. Sustainable transportation also requires users to rethink their modal choices, favouring public transit, Canada’s road network faces many challenges— carpooling and active transportation over single occu- some due to the country’s extensive land mass, harsh pancy car commuting, and by turning to greener and climate conditions, high degree of urbanization and more energy-efficient supply chains. dependence on trade, while others are more universal, such as ageing infrastructure, fiscal constraints, safety Transport Canada together with a federal-provincial concerns and environmental considerations. These will task force conducted extensive research on cost inter- continue to pressure governments to invest in Canada’s nalization through its Full Cost of Transportation study. roads; however, the public sector fiscal constraints will require new and innovative approaches to road infra- The consistent and rigorous Estimates of the Full Cost structure financing. Some solutions that may warrant of Transportation in Canada (i.e., the financial and social further investigation and that are already being used to a costs of transportation), were released in 2008 (see limited degree include tolls (see Addendum Table RO2A) Table 12.2). Financial costs include infrastructure capital and other user-pay mechanisms, public-private part- and operating expenses, as well as vehicle and carrier nerships for building and operating infrastructure, and capital and operating costs. potential efficiency gains through the use of technology The full cost of transportation in Canada estimated and intelligent transportation systems. Also, innovation for the study’s base year (2000) totalled $216.4 billion, in transportation finance leading to wiser investments which included $184.4 billion (85%) in financial costs, and potentially to more direct user charges may emerge. with the remaining 15% being social costs (see Table This will orient consumers and commercial organiza- 12.2). The five social costs ranked as follows: accidents, tions toward choosing the most cost-effective means of air pollution, congestion, GHG emissions and noise. transportation in any given case. Air pollution costs were the highest, representing 18% The need for infrastructure funding conflicts with lim- of social costs, followed by GHG costs at 14%. The ited public funding. The stifling effects of the recent road mode had the largest share of both costs at 82% recession and financial crises among heavily indebted and 80% respectively. governments at all levels have contributed to a financial-risk-averse environment. As well, with spending Despite its limitations, the analytical tool allows a curtailed, competition for funding among the various more comprehensive and compete way to compare other sources of public spending is increasing—health costs of transportation activities across modes. It can and education being two primary examples. be useful in a context where sustainable transportation considerations and user-pay principles are used to to The challenges identified above have implications for guide decisions. major initiatives such as developing Canada’s North. The various levels of Canadian government may have to assume a share of the risks if they hope to harness that region’s resource potential. This could mean making strategic decisions on the use of available resources, both public and private.

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Table 12.2 Full Cost Estimates by Modal Sub-activities in Billions (based on the 2000 dollar) Share of Mode Financial Costs Social Costs Full Costs Social Costs Intercity Passengers Light Road Vehicles 31.17 10.21 41.38 25% Coach 0.86 0.05 0.91 5% Rail 0.41 0.02 0.43 4% Marine 0.62 0.05 0.67 7% Air 14.65 0.58 15.24 4% Sub-Total 47.71 10.92 58.63 19% Local Passengers Light Road Vehicles 68.66 13.04 81.69 16% School Bus 2.82 0.13 2.95 4% Urban Bus 3.01 0.07 3.08 2% Local Rail 1.94 0.01 1.95 1% Sub-Total 76.43 13.25 89.68 15% Freight Truck 49.83 4.01 53.84 7% Rail 6.73 0.9 7.63 12% Marine 2.41 0.78 3.19 24% Air 1.24 0.03 1.27 3% Sub-Total 60.21 5.72 65.94 9% Unallocated 0.01 2.1 2.11 99% Total 184.36 32 216.36 15%

Source: Full Cost Investigation of Transportation in Canada Synthesis Report, 2008

The future development potential of markets in the south. However, the nature of the goods involved; heavy bulk commodities as opposed to light; the North and transportation possibly time-sensitive, finished goods; as well as the distance between existing Northern communities and Emerging economies are putting added pressure on resource extraction sites may lead to the establishment the world’s renewable and non-renewable resources—a of parallel north-bound and south-bound supply chains, trend that will sustain growth in resource-rich countries each tailored to meet specific and challenging needs. like Canada. The resource potential of Canada’s Arctic, despite the challenges it presents, could be developed Climate change presents both challenges and sooner under favourable world prices of resources. Such opportunities for Canada’s northern transportation sys- a development comes with its own new transportation tem. Degraded permafrost, melting ice caps and a shorter needs and requirements, and with its practical chal- ice-road season all affect transportation infrastructure lenges associated with northern realities. In many cases, and operations. By the same token, a warmer climate it enriches the paradigm of northern freight transporta- provides opportunities for increased socio-economic tion by adding the movement of extracted resources to development and associated transportation activity.

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Permafrost degradation has a particularly significant best practices. They aim to gather and analyze baseline impact. Airstrips, roads and railways, once thought to data, perform vulnerability assessments, understand be robust and secure, are becoming unstable and unre- the mechanisms and processes through which climate liable. Not only must significant repair and maintenance impacts transportation infrastructure and operations, costs be incurred, but other forms of economic develop- and develop solutions including new designs, more effi- ment reliant on the transportation system are hindered. cient operation and construction techniques, and new or improved innovative technologies. Northern waters have become increasingly active in recent years. As communities expand due to growing Other critical aspects of the initiative are disseminating demographics and as resource projects are developed, information, research results and best practices to those marine transportation in the north is likely to continue applying this knowledge, and supporting the develop- growing. Yet climate change is having an effect here, ment of the next generation of northern transportation too. Milder Arctic summers are sending dangerous experts. Over the coming years, the initiative will help hard-packed multiyear ice flowing into the Arctic Ocean ensure that Canada’s North can count on and benefit and into the shipping lanes of the Canadian archipelago. from a reliable, efficient and safe transportation system With more traffic in those lanes, there could be greater for its social and economic development. incidence of marine emergencies and a greater need for adaptive technologies to ensure sustainable, safe and Many projects in the coming decade are expected efficient transportation routes. to significantly alter Northern Canada’s transportation system; some of these are at the planning stage while As new navigational channels open, this will create others are already underway. Some of these projects are opportunities, including the development of new routes presented below for illustrative purposes. to resupply communities, transport natural resources extracted from the North to southern markets, and pro- Newfoundland and Labrador’s proposed vide a shorter route between the Atlantic and Pacific development of the Lower Churchill hydroelectric Oceans. However, these opportunities also introduce project will involve the construction of two hydroelectric new risks to the transportation system, be it on the dams, one at Muskrat Falls and the other at Gull Island. safety, security or environmental front. Increased traffic This project could place unprecedented pressure on will require an examination of the current transportation Labrador’s transportation system and related infra- infrastructure in the North. This is particularly challeng- structure, in turn generating significant and sometimes ing for marine navigation services and emergency and critical transportation issues tied to its relatively remote pollution-spill response. Care will need to be taken and sparsely populated location. The proposed project to develop precautionary measures and emergency may require new roads for moving materials to and from response capabilities comparable to those currently the site via the Port of Goose Bay. There will also be a found in southern regions. significant increase in passenger traffic at Goose Bay airport, where operations have recently been transferred Given the above, Transport Canada is investing in from the Department of National Defence to the Goose fundamental research and technology development Bay Airport Corporation. through its new Northern Transportation Adaptation Initiative. The initiative brings together key partners from The proposed Mary River iron ore mining project on federal departments, provinces and territories, and aca- Baffin Island (Qikiqtani region) in Nunavut, possibly demia and industry to envision a northern transportation the largest mining project in Canada and one of the larg- system that will be resilient to climate change. est iron ore developments in the world, would involve mining, ore-crushing and screening; rail transport; port This will require the appropriate authorities to operations; and marine shipping to global markets. understand how to manage transportation infrastruc- The project would include a 149-kilometre rail system ture and operations under changing climate conditions, to support the year-round transportation of ore from and also requires them to have the necessary tools and the mine site to port facilities at Steensby Inlet. In full technologies to apply that knowledge as well as the operation, this project will significantly alter the trans- skilled personnel to conduct adaptive operations. As portation profile of Nunavut, creating new infrastructure a result, the initiative partners are supporting research and important economic spin-offs. that will inform a better understanding of emerging climate trends and impacts, develop adaptive solutions for Quebec’s Plan Nord, an initiative aimed at promoting northern transportation infrastructure and operations, and developing northern Quebec, was launched May and expand knowledge of promising technologies and 9, 2011 and is expected to continue over a 25-year period. It contains expected investments of more than

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$80 billion for renewable energy, mining and public • the capital operating and financing needs of infrastructure including roads, ports and airports in the northern airports; northern part of the province. Plan Nord has six major public infrastructure priorities, namely: • the enhancement of the freight and tourism potential of waterways and ports; and • the extension of highway 167 to the Otish mountains; • the re-alignment of winter roads to improve remote • the extension of highway 138 between Kegaska and communities’ access. Blanc-Sablon; Studies will review all modes to define long-term travel • the rebuilding of highway 389 between Baie-Comeau trends and demand forecasts, identify strategic trans- and Fermont; portation network improvements and regional economic supports, establish a coordinated investment plan, and • studies of possible land connections between promote integrated economic land use and transporta- Kuujjuaq and southern Quebec; tion planning. • studies on a deep-water port in Whapmagoostui- The Alberta oil sands play a significant role in Kuujjuarapik and a road connection to Radisson; and Canada’s economy as the province’s total proven oil • improvements to airports. reserves, estimated at approximately 171 billion barrels—about 12% of total global oil reserves (1,469.6 Besides the priorities identified by the province, sev- billion barrels)—are critical to the world’s energy future. eral mining projects currently in the exploration phase Alberta ranks third after Saudi Arabia and Venezuela in will include the construction and relocation of railway proven global crude oil reserves. Of its supply, about and port infrastructures within the Plan Nord terri- 99% comes from the oil sands. tory. For example, the exploration of an iron deposit at Otelnuk Lake between Kuujjuaq and Schefferville could The continued extraction of Alberta oil sands depends lead to the construction of an approximately 800-km on satisfying regulatory requirements for responsible railway between the deposit and port of Sept-Îles. A and sustainable development as well as requirements second iron ore deposit exploration project close to the of the Navigable Waters Protection Act since that indus- Inuit community of Aupaluk, in Nunavik, includes the try requires the construction of works built in, on, over, construction of a port in Hopes Advance Bay. Several under, through or across navigable water. Transport engineering challenges will accompany the develop- Canada continues working with the provincial government of infrastructure north of the 49th parallel. These ment to streamline regulatory processes related to the improvements will also alleviate the isolation of the Navigable Waters Protection Program, and consulting communities residing in this part of the province. with Aboriginal groups potentially affected by developments along the Athabasca River. This process includes In March 2011, the Ontario government released the development of a map identifying the areas of great- its Growth Plan for Northern Ontario, 2011, and est concern related to navigability. launched a consultation process with stakeholders to identify long-term directions for transportation infra- Another prerequisite for developing the oil sands structure and services in Northern Ontario. The intent further is ensuring an adequate infrastructure to trans- of the consultation is to obtain views on how to address port personnel and materials. Highway 63, a two-lane, the following: undivided road between Edmonton and Fort McMurray, is the main route to and from the oil sands, with com- • the growth of the transportation, aviation and aero- muter, heavy-truck and dangerous goods traffic, and is space industry sector in northern communities; the only arterial route to the urban service area of Fort • the development of a range of transportation options McMurray. Highway 63 carries the highest tonnage per and investments in regional transportation links between kilometre in Canada, and the largest and heaviest loads hub communities and rural and remote communities; the country’s trucks have ever carried. • the development of revitalization strategies for inte- Finally, there remains the challenge of bringing oil grated public transportation systems within the core and gas from Western and Northern Canada to growing areas of the municipalities of Greater Sudbury, North markets in the United States and China. Two oil pipeline Bay, Sault Ste. Marie, Thunder Bay and Timmins; projects and one gas pipeline project have been proposed, namely:

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• Trans-Canada’s 3,456-km Keystone XL for trans- growth, but also in promoting greater competitiveness porting crude oil between Hardisty, Alberta and and productivity in Canada’s transportation system Illinois—for use in the U.S. or for delivery to overseas and sector. markets, and to deliver gas condensate3 from the port of Kitimat to Alberta; Transportation innovation is not a new concept; over the past twenty years, productivity gains in Canada’s • Enbridge’s 1,177-km Northern Gateway twin pipe- transportation sector have outpaced that of Canada’s line between Bruderheim, Alberta and Kitimat, British overall economic growth. These gains were largely Columbia; and driven by mode-specific, market-oriented policies and regulatory measures, such as commercialization, priva- • the 1,220-km Mackenzie Valley gas pipeline between tization and deregulation. However, in recent years the Northwest Territories and Alberta, which was these sector-specific productivity gains have started to approved by the federal cabinet in March 2011 tail off. The competitiveness of Canada’s transportation All three projects would impact the transportation sector is also challenged by issues such as ageing infra- system during their construction, and would allow other structure, congestion in major cities and along trade resources to be developed once completed—further corridors and border crossings, the rising costs of fossil altering the transportation landscape in Northern and fuel, security concerns, and the challenge of continu- Western Canada. The Northern Gateway project specifi- ing to preserve and improve safety in spite of greater cally would have important transportation implications, traffic volume. bringing oil and gas tankers to the port of Kitimat, mark- To overcome these challenges and encourage edly increasing the use of that port and potentially productivity and competitiveness, governments, indus- raising issues with navigating the Douglas Channel, try, and academic stakeholders are collaborating to foster which links the Pacific Ocean to the port. Both the greater transportation innovation, including investments Keystone XL and Northern Gateway projects are in the in transportation-related research and development, regulatory review process. technology development and deployment, and sharing of best practices. 12.4 Technology and Research and analysis are essential to developing research in the pursuit future transportation policies. This is particularly true for transportation issues, in which economic, social, envi- of an efficient, clean, ronmental, safety and security considerations must all safe and secure be weighed. There are a number of active transportation research forums conducting leading-edge work in trans- transportation system portation research; amongst those is the OECD/ITF’s4 Joint Transportation Research Centre (JTRC), of which Canada is a member. The JTRC conducts research on a echnology as an enabler of a more T variety of topics, brings together international transpor- efficient transportation system tation experts and contributes to the annual International Transportation Summit. The 2010 summit was presided Innovation has increasingly been recognized as an by Canada and innovation was its theme. important element in stimulating long-term economic growth. However, in recent years a number of well-pub- Closer to home, the Canadian Transportation Research licized reports by the Council of Canadian Academies Forum promotes the development of research in trans- and the Institute for Competitiveness and Prosperity, portation and related fields and provides a forum for among others, have suggested that Canada’s persis- networking and discussion. It also publishes research tently lagging productivity growth is directly tied to weak papers, provides opportunities to discuss transporta- innovation performance. tion issues and organizes an annual conference. Finally, Transport Canada conducts numerous research projects Innovation—which can be defined as new or better through a variety of means, including its Transportation ways of doing valued things—plays an important role Development Centre or through its Socio-Economic not only in strengthening Canada’s long-term economic Research Fund (see Section 5.6).

3 Gas condensate is a diluent that reduces the viscosity of crude oil, making it easier to transport by pipeline. 4 Organisation for Economic Co-operation and Development/International Transportation Forum

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Investment in and deployment of productivity-enhancing technologies and processes have improved the perfor- Truck Reservation System at the Port of mance of Canada’s multimodal transportation supply Metro Vancouver chains. For example, the use of Radio Frequency Truck reservation systems use software and communications Identification (RFID) tags and GPS/satellite tracking and equipment (such as RFID tags and readers) to allow operators to monitoring technologies has proven effective in a recent schedule the arrival of trucks for container pick-up and delivery. China-Canada cargo container pilot project aimed at They also track trucks, align them with their scheduled time slots, enhancing the efficiency and security of transporting goods. and direct them to the appropriate location within the port facility. In coming years the use of these systems is expected to grow and Focusing on fostering greater integration of Canada’s become more sophisticated, leveraging the capabilities and ubiquity transportation system will stimulate the next generation of smart phones and other mobile devices. of sector productivity gains and further improve system The Port of Metro Vancouver has had a truck reservation system in performance. Currently, transportation stakeholders place since 2001 at its VanTerm, Centerm and Deltaport terminals. are piloting innovative approaches to supply chain and Trucks with a reservation for a particular time slot have access to fleet management, resulting in more efficient, reliable reserved gate lanes, reducing turnaround and engine-idling times. This and lower-cost services. Moreover, network-sharing kind of information technology systems is creating efficiency gains at modal interface facilities and generating environmental benefits. arrangements have demonstrated increased fluidity, and systematic and proactive risk-management practices. The information technology revolution has improved complemented by further gains in safety, security and the efficiency of transportation and enabled the inte- environmental performance. gration of different modal activities. Potential future The potential for future efficiencies also rests in the technological developments are unclear, but will likely ability of ITS to facilitate integration and interoperabil- focus on stresses to the system caused by economic ity between jurisdictions. ‘Smart corridor’ strategies are growth and increased passenger and freight traffic, and being developed and applied in Canada to examine on continued pressure to make transportation safer and transportation systems and achieve maximum efficien- more environmentally sustainable. cies using existing infrastructure, minimizing the need Intelligent Transportation Systems (ITS) have been for new capital investments. This requires stakeholders instrumental in delivering major efficiency gains across to work together to identify priorities and gaps, coordi- all transportation modes in Canada. Such gains will nate plans, and integrate systems. continue with the ongoing growth of data flows and Merging ITS with the next generation of wireless the proliferation of sophisticated geographic position- communication networks may allow tomorrow’s trans- ing tools, mobile communications and ever-greater portation system to prevent a significant number of computing power. Future ITS developments will pro- accidents. For example : vide transportation users and operators with reliable, accurate, timely multimodal information—about traffic, • Intersection collision avoidance systems that use transit and parking—often through smart phones and sensors and wireless connectivity to monitor traffic other mobile devices. Operators will be able to manage approaching dangerous intersections and warn vehi- their transportation assets holistically, and travellers will cles of approaching cross traffic. In the near future be able to make informed decisions before departing these systems will warn drivers of potential dangers, and while en route to their destinations. such as a vehicle that is about to run a red light, or provide services such as left-turn assist. In surface transportation, ITS will combine positioning systems, vehicle and infrastructure sensors, and • Collision avoidance systems that use Wi-Fi, radar, data management processes to create transformational sonar, lidar5 or other sensors to detect nearby vehicles transportation solutions that address surface and inter- and potential roadway hazards and alert drivers so modal transportation challenges while maximizing the they can take corrective action. Some systems could efficiency and output of transportation infrastructure. also take proactive measures to avoid or mitigate the The widespread availability of wireless communications severity of a collision, including providing automated will allow for much greater connectivity within each braking assistance and engaging vehicle stability mode and at the interfaces between modes, allow- control systems. ing for more efficient movement of people and goods,

5 Light Detection and Ranging. It operates on the same principles as radar, but using light (or a laser) rather than radio waves.

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• Pedestrian detection systems using wireless help. Many older aircraft, particularly Boeing B-737s, connectivity, radar sensors and/or cameras that B-757s and B-767s, are now retrofitted with blended detect people in front of a vehicle, warn if anyone wingtips to improve fuel efficiency. walks out into its path and then automatically activate the brakes if the driver fails to respond in time. Finally, operational changes such as the use of satellite-based navigation, more efficient take-off and landing Other possible applications of ITS include lane departure procedures (e.g., continuous descent7) and the possible warning systems, drowsy-driver detection systems, introduction of electrical taxiing8 are further examples of wildlife detection systems and road weather sensors. how technology may help the aviation sector reduce its carbon footprint. Advances in communication technologies will also improve safety in relation to railway-roadway grade crossings, with the development of low-cost grade Technology as an enabler of a more crossing warning systems based on wireless wheel sen- sustainable transportation system sors. These will also permit remote monitoring of the physical condition of infrastructure and structural health Governments (federal, provincial/territorial, municipal), of bridges. academic researchers and industry will continue to work Efficiencies will also come from the explosion of user- together to better understand the potential impacts of generated non-profit content and collaboration made climate change on the transportation system, and to possible by increases in data availability and accessi- assess different options and strategies to address the bility. For instance, fuelled by streams of “open data”, impacts. Technology has a clear role to play in enabling individual programmers have created many success- sustainable transportation. ful transportation-related apps (applications) for smart In 2010, the Canadian Council of Ministers of the phones, providing travellers with more accurate, real- Environment agreed to move forward with a new time information. This trend is already underway, and national approach to air management: the Air Quality will permit the development of efficiency-enhancing Management System (AQMS). This federal-provincial applications at a relatively low cost. initiative will establish regionally coordinated air sheds In aviation, advances in engine technology, efficiency and air zones within individual provinces and territo- gains in air navigation, and the use of lighter materials in ries, and use coordinated mechanisms across federal airframes have significantly reduced the fuel burn of and provincial environment, transport and energy min- modern aircraft on a passenger-kilometre basis. These istries to address transportation emissions. Under the changes have been driven by a desire to reduce both auspices of the Council of Ministers Responsible for aviation’s carbon footprint as well as costs, as fuel is Transportation and Highway Safety, federal, provincial often an air carrier’s greatest expense. Adopting such and territorial transport ministries are collaborating to new technology for a carrier means reducing its fuel con- advance a national vision for transportation to 2030 that sumption, which is exactly what Air Canada hopes to includes advancing sustainable transportation issues achieve when it starts receiving in 2014 its 37 Boeing 787 and understanding air emissions issues and challenges Dreamliner aircraft purchased for long-haul flights. Many in a national context. airlines are expected to replace regional jets with more In 2011, the Government of Canada approved a new fuel-efficient aircraft such as the Bombardier Q-400 tur- suite of initiatives to follow the 2007–2011 Clean Air boprop—a trend that will likely continue in the future. Agenda. The new initiatives support the government’s New or re-engined6 aircraft such as the Bombardier commitment to pursuing a balanced approach in reducing C-Series, the Airbus A-320neo and the Boeing emissions, which recognizes the importance of greening B-737Max promise to deliver significant fuel-burn the economy for tomorrow and protecting jobs today. reductions. Evolution of drag-reducing wingtip devices Specific to transportation, the new initiatives cut across such as winglets, sharklets and raked wing tips also numerous federal departments and organizations, including Transport Canada and Environment Canada.

6 Using a new technology engine on an existing aircraft. 7 As opposed to the current practice of a step-down approach. 8 Taxiing refers to aircraft moving on the ground and on its own power.

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They use regulations to meet existing emission-reduction Technology as an enabler of a safer commitments (for example, GHG emission regulations for light- and heavy-duty road vehicles) and set targets transportation system for the adoption of clean technologies and practices. Important changes will be made in the coming years to Embedded in all of this is a new approach to the regulatory framework governing transportation addressing transportation-related emissions that safety in Canada. Changes will account for stakeholder focuses on encouraging technology uptake. Targeted inputs, streamlining and simplifying regulatory burdens incentives will accelerate technology deployment to on companies and resorting to regulation only when address emissions sources that fall under federal juris- no other means is feasible. Performance-based rather diction (e.g., ports, interprovincial and international than prescriptive regulatory frameworks will prevail. shipping). These incentives will aim to balance and Safety Management Systems are an example of regu- optimize the environmental, safety and economic per- lated entities’ greater role in ensuring desired regulatory formance of the Canadian transportation system. outcomes, and they offer the potential to further entrench a strong safety culture within the stakeholder community. It is In addition to Transport Canada and Environment an approach aligned with Cabinet Directives on Streamlining Canada, Natural Resources Canada will also be involved Regulations10 and the Red Tape Reduction Commission. in transportation initiatives, promoting the sustainable development and use of the country’s energy supply. Innovation and rapidly evolving transportation Elements of its Vehicle Efficiency Program will be sup- equipment technologies have been and will continue ported by clean transportation initiatives (e.g., consumer to be instrumental to safety and emissions improve- awareness, labelling and Smart Way Partnerships9). ments. Traditional engineering and safety/environmental Natural Resources Canada’s research and develop- standards have focused on vehicles/equipment. On the ment initiatives for pre-commercial on-road innovations safety side, emphasis has been placed on avoiding acci- will complement Transport Canada’s commercial-stage dents altogether. In road vehicles, advanced in-vehicle vehicle technology proposals. systems that use sensors and complex signal processing to detect and evaluate hazards in the road traffic One-way regulations are expected to generate environment are already on the market (e.g., automatic environmental benefits and reduce fuel use and emis- collision-warning and braking systems). sions is by accelerating technological change. This will require Canada’s current vehicle safety approach Because transportation equipment industry manufac- to become more proactive, streamlined and targeted. turers see competitive advantages in offering increasingly Identifying environmental benefits and potential safety sophisticated systems to achieve higher levels of safety, the risks earlier in the development of new vehicle technol- systems being developed will have to be assessed in terms ogies facilitates the safe, cost-effective introduction of of their impact on transportation operations and their actual advanced vehicle technologies in Canada. impact on safety. For example, the availability of wireless communications combined with the emergence of increas- Transport Canada’s Transportation Development ingly powerful and more affordable mobile devices in use Centre conducts research and development in sup- within automobiles will remain under the scrutiny of transport of the government’s Clean Air Regulatory Agenda. portation safety. Its projects include initiatives to develop regulations and technologies increasing Canadian rail network capacity, The transportation system of the future will be tied and to ensure regulatory compliance. Its five rail-related to multi-modal information systems. Advanced ITS research and development areas are: locomotive sys- developments may well be at the forefront of profound tems, data management, infrastructure, railcars and transportation safety improvement aimed at reducing fuels. The Centre is also engaged in marine-related the number of annual road accidents. R&D, with emissions inventories, emission control, With expected increases in northern economic improved energy use, alternative fuels/power systems activities over the coming years, the safety of transpor- and ice navigation being its main focus. tation activities in the Arctic will receive special attention. The First Air accident on August 20, 2011 near Resolute

9 A voluntary partnership between the U.S. Environmental Protection Agency, shippers and freight companies where the other two commit to benchmark operations, track fuel consumption and improve environmental performance annually. 10 http://www.tbs-sct.gc.ca/ri-qr/directive/directive00-eng.asp

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Bay was a stark reminder of the challenges related to One of the biggest changes to security screening mounting search and rescue operations in Northern equipment recently was the introduction of full-body Canada, even when cold temperatures are not a factor. scanners, which work by projecting low-level milli- With respect to marine transportation, Arctic shipping metre wave radio frequency energy over and around is growing rapidly with the opening of the Arctic due to the passenger’s body. The radio frequency wave is climate change, and marine safety issues are bound to reflected back from the body and signals are recov- gain importance as traffic increases. Transport Canada ered using highly sensitive detectors, which are then will continue to monitor proposed and actual changes processed and converted to digital format to produce to shipping patterns in that part of the country, with spe- a three-dimensional image, revealing objects concealed cial attention on the Northern passageway. on the body. Its positive evaluation on a trial basis in early 2009 at Kelowna B.C airport—as well as a failed terrorist Global interest in Arctic resources—including minerals, attack—led the government to proceed with deploy- oil and gas—is intensifying. Greater activity in the Arctic ment of this technology at 20 Canadian airports, making will create security issues for the Canadian government it part of Canada’s aviation security screening system. and international maritime shipping community. The The entire scan process takes about five seconds and potential increase in the shipping required for resource meets all regulated health and safety requirements. exploitation in the Arctic, as well as an increase in cruise ship traffic, may impact the environment and existing New full-body scanning technologies will be further infrastructure and communities. The Canadian gov- developed and equipped with advanced auto-detection ernment is working toward a coordinated strategy to software. Current designs are essentially based on strengthen transportation links to and within the North, two different design concepts: x-ray backscatter and including improved infrastructure to support social and millimetre wave. Due to health regulations, many juris- economic development and enhance Canada’s security dictions restrict the body scanning process to millimetre and sovereignty. wave systems only. For that reason, this latter system may witness a greater development in the near future. Technology as an enabler of a more Another technology trend in the field of aviation security secure transportation system is the introduction of improved x-ray technology that provides multiple views and significantly better images, A new generation of transportation security equipment allowing operators to detect prohibited items in carry-on has or will soon be introduced, driven by changing bags in a more efficient and timely manner. security needs and threats and by technological innova- Finally, air cargo security has been receiving additional tions that improve threat detection. Another emerging attention due to the $95.7 million dedicated to air cargo development is the networking of security equipment, security over five years within Budget 2010. As part of which enables the remote screening of passengers and this program, new technologies (e.g., x-ray, explosive baggage from a centralized location. From a security trace detection) are introduced for screening air cargo perspective, this arrangement has many advantages and then adapted to the different sizes, contents and and provides a great deal of operational flexibility. packaging that are prevalent in that segment of the air Improving screening and developing smarter transport industry. approaches is an ongoing security task. This involves NEXUS11 lines are already operating in all eight major no change to Canada’s common security standards, international Canadian airports at domestic and select but rather has more to do with learning from experience international checkpoints. Passengers travelling to the and applying these lessons to the entire screening pro- U.S. will soon be able to use NEXUS cards as well as cess. Moving away from a “one-size fits all” model of dedicated lines to be screened faster at Canada’s largest screening is one such approach, allowing more screen- airports (Halifax, Montreal, Ottawa, Toronto, Winnipeg, ing resources to be devoted to higher-risk individuals/ Calgary, Edmonton and Vancouver). The Government of situations. This requires revisiting and updating prohib- Canada will work closely with airport authorities to start ited items lists and harmonizing them with those of the fully implementing this service in 2012. rest of the world.

11 NEXUS is joint program between the Canada Border Services Agency (CBSA) and the U.S. Customs and Border Protection (CBP) to expedite the border clearance process for pre-approved travellers into Canada and the United States. Participants in this voluntary program receive a NEXUS card, which identifies them as low-risk travellers and allows them to use NEXU.S. priority lanes at certain border crossings.

146 Transportation2011 in Canada Outlook, Trends and Future Issues 12

The Aviation Security Regulatory Review will be With respect to the transportation of dangerous goods pursued in coming years to renew the security regula- by road and rail, Transport Canada has been conduct- tory framework for all air transportation industry ing risk-based analyses to determine the best approach stakeholders and carriers. The Canadian Air Transport for enhancing security by using a multi-phased policy Security Authority (CATSA) and other aviation service development process that includes an environmen- providers will work closely with industry to understand tal scan, consultations and information gathering; a and minimize the regulatory burden while promoting strategic security-risk assessment; and an evalua- further harmonization of the regulations with interna- tion of potential policy options. The process includes tional standards. consultations with industry, other federal government departments and provincial representatives. Transportation security practices will continue to mature and adapt to a dynamic context, the complexity of technology, increased operations and globalization, 12.5 Conclusions as there is a need to apply modern security practices. Because there will always be hazards, risks and threats, This chapter has touched on a great number of issues, Transport Canada is committed to and supports a more both global and local, that will mould the evolution of comprehensive approach—the use of security man- Canada’s transportation system in the coming years. agement throughout the transportation system—under Not only is demand for passenger and freight services a policy framework that makes the industry account- shifting, but the manner in which transportation services able for systematically and proactively managing risks are delivered will also have to evolve, be it through more and threats within their transportation activities. This is accessible passenger transportation, better integrated done through formal frameworks designed to integrate freight supply chains, more sustainable transportation security into the daily operations of a transportation or a continued emphasis on safety and security. enterprise, combining a variety of processes that interact to achieve the overall goal of managing risks and For passenger and freight transport, future challenges threats. This type of approach has been successfully are expected to come in part from significant changes taken in the rail and urban transit sector. in the origins and destinations of international freight and passenger traffic to and from Canada. A modern, Transportation operators are advancing their own flexible policy and regulatory framework coupled with security culture and implementing security measures continued progress on the technology and research to address specific needs without undue interference front, innovative funding models, and cooperation to the efficiency of their system. Security is a reality across governments and between the public and pri- of the modern environment, and transportation opera- vate sectors will be key to successfully addressing tors are increasingly enhancing their security cultures these challenges. and adopting security measures as a matter of good business, rather than because they are imposed by regulatory requirements.

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Conclusions 13

The future of the transportation industry will continue to be one of adjustments driven by global and domestic changes in competition and in market conditions.

As this report has shown, Canada’s transportation sector on fossil fuels and leverage new fleets of vehicles that has largely recovered from the effects of the 2008–2009 integrate new technologies, advanced materials and recession. Yet the world economy remains in a fragile emerging fuel sources. state, and risks remain—associated with the European sovereign debt crisis and a slow, prolonged recovery in For a trading nation like Canada, the Gateways and the U.S. Perhaps the only certainty with respect to the Trade Corridors strategy has led to improvements in the global economy is that uncertainty is here to stay. country’s competitiveness in the world market. Another major challenge in the years ahead is likely to be meet- Within this context, however, Canada’s transportation ing the ongoing needs for infrastructure maintenance sector continues to be dynamic and innovative across all and improvement while accounting for the realities of modes. Both passenger and freight transportation have fiscal constraint. grown in volume, and initiatives are in place to improve the environmental sustainability, safety and security of The Canadian transportation system is vital to the transportation. Accessibility remains an important con- nation’s economy and Canadians’ quality of life. The sideration, particularly given the aging of the population. challenges ahead will require the sector to simultaneously address issues tied to financing, aging Adaptability is essential in transportation: the ability infrastructure, institutional change, energy consump- to respond to social and economic changes. Diversified tion, the environment, safety and security. networks of trade are driving ever-greater demand for transportation, and the economics of transportation The future of the transportation industry will continue require demand be met with in ways that keep costs to be one of adjustments driven by global and domes- down and achieve the highest levels of efficiency tic changes in competition and in market conditions. and reliability. Existing and future natural resource Alternative and innovative transportation service and developments as well as sprawling global industrial infrastructure delivery models will showcase technologi- supply chains will require more and more support cal breakthroughs supporting transportation’s efficiency, from Canada’s transportation system to sustain eco- reliability, sustainability, safety, security, and integration nomic growth. across modes and boundaries. Taking advantage of new technologies and ongoing adjustments to programs, One of the chief challenges in coming years will be to policies and regulatory frameworks will permit to address decouple economic growth from energy use and green- new pressures on Canada’s transportation system. house gas emissions—not only reducing the amount of energy spent to move one passenger or tonne over one kilometre but also to bring down the total amount of energy used despite growing demand. Across all modes, operators have to reduce their dependency

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